As everyone else sells, China buys U.S. debt

A cyclist rides past the People's Bank of China in Beijing.
Nelson Ching | Bloomberg | Getty Images

For fixed-income investors, low long-term bond yields have been a mystery.

With the Federal Reserve unwinding its historically aggressive easing program and expectations growing for economic growth as the year progresses, market pros have been expecting yields, particularly further out on the curve, to start swelling.

However, the 30-year bond yield is about half a percentage point lower than where it started 2014, and the yield curve, or spread between yields of varying maturities, actually has flattened.

David Yoo, the well-known forex and rates strategist at Bank of America Merrill Lynch, thinks he knows what's been driving the low yields: China.

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