Stocks fell and bonds rallied last week on concerns that a slowing Chinese economy will put downward pressure on global economic growth. Chinese imports and exports in March both contracted versus the year ago period, and while part of the decline may be due to obscure billing arrangements in 2013, financial markets took the data as a sign of weakening growth. Economists are quickly lowering their 2014 Chinese GDP estimates to +7.4%, the slowest pace since 1990. This, coupled with recent loan defaults in the property sector, is creating a “flight to safety” trade where stocks and other risk assets do poorly and high quality bonds do well. In the past, the Chinese government has stepped in with economic stimulus packages to help support growth. While the government has promised no such package this time around, pledging to “pay more attention to sound development in the medium to long run,” we suspect that should growth slow markedly, the government would step in to help. From a U.S. perspective, China represents our second largest trading partner and any slowdown there would likely affect growth here at home. China represents the largest risk to our outlook for higher rates in 2014, and as the situation evolves, so will our view.