The gap between the US and China’s borrowing costs has grown to its widest level in more than a decade, in a sign of the sharp divergence in the bond market’s expectations for the world’s two largest economies.

Yields on China’s benchmark 10-year government bonds fell 0.05 percentage points to 1.77 per cent on Friday, a new record low following a signal by Beijing that it could lower interest rates. US 10-year bond yields were, meanwhile, up marginally at 4.33 per cent. Yields fall as prices rise.

That widened the gap between the two to more than 2.5 percentage points — the biggest since at least 2011, according to LSEG data. The move reflects concern that China’s economy has entered a deflationary spiral and the belief that US President-elect Donald Trump will enact aggressive fiscal measures to boost the US economy, which could increase its deficit.