China's central bank said on Friday it has suspended treasury bond purchases, triggering a jump in yields and spurring speculation that the move was aimed at defending a falling currency.

Aging populations, as Japan taught us, are inherently deflationary. Folks in their 70s don’t spend the way 20-somethings do. With the unemployment rate for Chinese between 16 and 24 stuck above 17% —or higher given the vagaries of Beijing’s data—what good will subsidies and rebates do?

The unexpected action is intended to tamp down a potential bubble in the bond market fueled by investors shunning riskier assets like stocks and real estate.