The news from China is helping stocks today. After the Peoples Bank of China had hinted earlier this week it would no longer intervene in the stock market, the bank came in heavily last night and sent the Chinese index up more than 5.0%. The bank did this when Chinese stocks were close to unchanged, and traders took this is a sign the Chinese want more from that market than stability.

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The bond market came under heavy attack yesterday resulting in an almost three point loss in the 30-year bond. Dealers reported heavy selling across the yield curve, but the 30-year bond was a standout loser. Today, bond prices started the day with small losses.

Although Donald Trump might tell you China is trying to destroy America, the simple fact is the Chinese need to raise money to fund support efforts at home, and U.S. treasuries are the most liquid assets they have to sell. Treasury bonds are also the largest holding they have $1.35 trillion as of June. This selling was probably what restrained the bond market during the stock sell-off. As long as we see China intervening in the stock market and pumping up bank reserves, the fear of Chinese selling will hang over the market.

Dwight Johnston is the chief economist of the California and Nevada Credit Union Leagues and president of Dwight Johnston Economics. He is the author of a popular commentary site and is a frequent speaker at credit union board planning sessions and industry conferences.