China's recent Treasury sales probably represent an effort to keep the depreciation orderly, using dollars to buy yuan from bearish investors, rather than the start of a belligerent bond dump. Over the last two months alone, the Chinese have dumped some $17.5 billion in US debt. The conventional wisdom is that China would never just dump U.S. Treasury bills since it would end up boomeranging right back on Beijing. Countries Team Up to Take Down the U.S. Dollar. Answer (1 of 14): If China "dumped" USA treasuries, they would take a serious monetary loss. 403. In the process, Japan has surpassed China as the major holder of US treasuries for the first time in . "We hold a decent amount of Treasury bondsmore than $200 billionand if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner," Glazyev said earlier this month, per . And the Fed can go about its path of raising . Although there are worries of China selling off U.S. debt . They're dumping Treasuries, each for their own reasons that are now coinciding. At the start of this week, it dropped below 2 percent, but was back trading at . This past summer, Belgium's Treasury holdings unexpectedly doubled to the tune of between $150 and $200 billion, commensurate with China's reported net purchases. China invests billions into trade routes to bolster industry 05:22. Again, China is just one (big) buyer in a sea of many. For each seller of an asset, there is a buyer, and if we are witnessing a world where China is rapidly dumping US debt, there will be ample buyers willing to buy the safe haven asset of Treasuries. China owns about $1.2 trillion -- or roughly 10 times as . 883 Followers. China occasionally manages US treasuries in a fashion that people often claim as "dumping". The data cover trading in Treasuries with a maturity of more . For the 12-month period ended July, sales of Treasuries by . Belgium also saw significant selling (often considered a proxy for China selling via Everclear), now with the lowest holdings since Sept 2020. In theory, Beijing could trigger a panic in bond markets by dumping some of the $1.1 trillion in US Treasuries that it owns. China could dump its $1.17 trillion hoard of U.S. Treasurys in retaliation if there is a trade war with the United States, economists warn. Dropping to $800 billion from the current level could mean shrinking its holdings by more than 25%. The Treasury had . GOLD , KWN King World News. US debt is viewed as among the safest assets on the planet.. Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis . In Beijing's signature soft-power style, the government hasn't made any loud announcements on the issue. In response, Putin adviser Serge Glazyev said Russia would strike back through financial means. The People's Bank of China responded in November of 2013 by announcing it was ending its purchase of U.S. Treasury bonds. The price of the treasuries would drop, effective raising the return for those who bought the bonds. In fact, over the last two months, China sold over $34 billion in Treasuries - the biggest dump since 2016. The dollar has been the world's reserve currency for . According to the latest published data, China and Japan dumped U.S. Treasuries the most in August. The most recent incident came when US President Donald Trump imposed an additional 15 percent tariff on $200 billion worth of Chinese goods in response to China's alleged back-pedaling on key . Ireland holds about $262 billion of U.S . China . For its part, Beijing, the largest foreign owner of Treasuries, cut its holdings by $5.8 billion to $1.18 trillion. One measure China could take that keeps popping up in conversation is that the country could start dumping its massive hoard of $1.1 trillion worth of US Treasurys en masse, depressing their value . Flooding the market with treasuries would push down US bond prices and cause the yields to spike. The Bank of China rationally prefers to earn interest on dollar holdings, so these are converted to US treasuries. . Over the last 12 months, the Chinese have shed $69 billion of its Treasury securities. The U.S. will convert China's $1.4 trillion of Treasury notes to a trust fund for COVID-19 victims and economic damages. The People's Bank of China, owner of the world's biggest foreign-exchange reserves, burnt through 20 percent of its war chest since 2014, dumping about $250 billion of U.S. government debt and . "Ahead now, I think you'll see the big nations shrink back into their own corners of the world. By releasing a flood of US Treasuries, the price would collapse . India firing up orders for its homegrown Astra missile June 9, 2022; China claims new AI can intercept hypersonics June 6, 2022; US-made parts keep Russia's artillery firing in Ukraine June 3, 2022; China floats first-ever AI-powered drone mothership June 1, 2022; US failure to tackle Russia's fearful Wagner Group May 28, 2022; China aims to take out Elon Musk's . China sold US$6.22 million of US Treasury securities in September, lowering its total holdings to US$1.062 billion, according to the latest monthly Treasury International Capital (TIC) report from . There's another $100 billion worth . Answer (1 of 14): If China "dumped" USA treasuries, they would take a serious monetary loss. Ahead of this week's Fed decision, China is now dumping unprecedented amounts of U.S. Treasuries. China Dumping U.S. Treasuries. China is. China's threat to dump US Treasuries "in an extreme case, like a military conflict" is an important development for the . But Eswar Prasad, a very smart economist at Cornell University and a senior . If China starts dumping large amounts of debt on the market, interest rates will likely soar and the dollar would plunge. In September, these foreign entities had already dumped a record $76.6 billion. China's holdings fell to $1.05 trillion in November 2016, marking the lowest level since 2010. U.S. TreasuriesHere is how Peter Boockvar summed up the situation: In case you didn't see, on Friday at 4pm the Treasury International Capital flow data for July was released and it continues to be a big focus of . No matter how one twists or turns, the US wins if China dumps US treasuries. For starters, China could fire back by dumping its vast holdings of U.S. government debt. Chinese officials have been talking about dumping U.S. debt the so-called "nuclear option" since at least the . Make no mistake: it's a much bigger problem for China than it is for us. . At the start of this week, it dropped below 2 percent, but was back trading at . Dumping Treasuries would likely raise borrowing costs for U.S. consumers and businesses, but it would also hurt the value of China's own Treasury assets, which top $1 trillion. The price of the treasuries would drop, effective raising the return for those who bought the bonds. China then sold $48 billion in US Treasury bonds in the month of January; American interest rates jumped-up, and the yuan weakened by 5 percent. According to US Treasury data, major foreign holders of US treasury securities have been reducing their holdings by almost US$250 billion since March. Its holdings of US Treasury bonds, notes and bills peaked at apprx. Japan urges China to play 'responsible role' for peace; Exclusive: US Treasury's Yellen and trade czar Tai at odds over China tariffs; Japan and US preparing statement promising to 'deter' China, Nikkei reports; Flight MU5735 crash: bereaved relative demands answers from airline over US report of deliberate dive A deepening trade . By selling off U.S. debt, China would depress the value of its own national wealth and undermine its most important trading partner. Even at Russia's recent peak of $105.7 billion in November 2017, it only ranked as the 15th biggest foreign holder of US debt. China Dumping U.S. Treasuries. However, for the purposes of this discussion, they will be considered one and the same, and can just be called "Treasuries". In July of this year, China's holdings of US Treasuries fell to $1.22 trillion, the lowest level in three years. While the move would be partly self-defeating for China, it would also have devastating consequences for global financial markets, Sourabh Gupta, a senior . The Chinese haven't been dumping Treasuries at the same rate as the Japanese - at least not until recently - but they haven't been buying either. The bottom line is that since China has become a net seller of Treasuries, liquidity has dried up. Military & Security. Still the number-one foreign holder of the US sovereign debt, China has cut its share to the lowest level since May 2017. Although China's holdings have represented just under 20 percent of foreign-owned U.S. debt in the past several years, this percentage only comprises between 5 and 7 percent of total U.S. debt. Japan is the second-largest holder of US Treasuries with $1.21 trillion in its system, according to Federal Reserve data. Theoretically, if China were to dump this debt onto the market, US bond prices would drop and force the government to . However, the People's Bank of China has been regularly reducing the country's share of US Treasuries. Holdings of U.S. government debt cut in half to $48.7 billion. If China starts dumping U.S. bonds, the price of bonds declines, and other countries and holders of bonds are adversely affected. . (Reuters) - The trade war between Beijing and Washington has stoked concern in financial markets that China might opt to weaponize its holdings of more than $1.1 trillion worth of U.S . It is true that if China does dump US Treasuries on a large scale, it might cause other foreign governments to follow suit in a panic, causing US interest rates to rise, the dollar to depreciate . (Click on image to enlarge) Source: Bloomberg. One of the most intriguing mysteries of the last three months is this . Data shows Japan remains the largest holder of US Treasury bonds for the thirtieth month in a row, increasing investments by $20.2 billion in November to $1.34 trillion. Since then, however, China has been reducing its holdings of US debt. China sold $20.5bn of US government bonds over the course of the month, according to data released by the US Treasury on Wednesday. China has steadily decreased its holdings of the U.S. bonds this year, although some market watchers suspect China may not have necessarily sold U.S. Treasuries as it may have used other custodians to purchase Treasuries. The yield on the benchmark 10-year U.S. Treasury note was at around 2.141 percent at the time of China's devaluation. There's no net flow of dollars to the US Treasury. (Click on image to enlarge) Source: Bloomberg Assume China has $2 trillion in total dollar reserves. The UK is the third-biggest holder with $621.6 billion. SHANGHAI: China may gradually cut its holdings of U.S. Treasury bonds and notes, in light of rising tensions between Beijing and Washington, state-backed newspaper Global Times cited experts as saying. I wonder if anyone can enlighten me on Mish's comments at his recent Google Tech Talk, posted on the June 7th's Daily Digest : v=1YKc0UolTqE&e. China CAN'T dump U.S. Treasuries - General Discussion and Questions - Peak Prosperity Forum The first two ways would change nothing for either China or the United States. China's threat to sell U.S. debt bonds should be concerning for everyone, not only Americans. Japan urges China to play 'responsible role' for peace; Exclusive: US Treasury's Yellen and trade czar Tai at odds over China tariffs; Japan and US preparing statement promising to 'deter' China, Nikkei reports; Flight MU5735 crash: bereaved relative demands answers from airline over US report of deliberate dive With the trade war ramping up, according to GaveKal, the US has a nuclear option if China starts dumping US Treasuries. China's stake along with other foreign buyers, comprising 40 per cent of the market, has down the years helped contain US interest rates, enabling Washington to spend and push the federal . Anjani Trivedi. One of the most intriguing mysteries of the What if China and Japan dump their US Treasuries? However, Russia and China were not the only foreign countries losing appetite for US bonds, bills and notes: Japan has diminished its Treasuries by $12.3 billion to $1.03 trillion. China currently holds around $1.11 trillion in US bonds. With Sino-U.S. relations deteriorating over various issues including coronavirus, trade and technology, global financial markets are increasingly worried if China would sell the U.S. government . Combined, they unloaded $63.5 billion in October. China sold $600 billion of US Treasuries between mid-2014 and late 2016 and yet yields went down, according to Stifel's Bannister. Indeed, the tempo of China's U.S. Treasury purchases has slowed over the past year, from $46 billion in 2016 to about half as . China holds around $1.2 trillion worth of Treasury securities, along with another $200 billion or so in debt from U.S. government agencies such as Fannie Mae. Although China is rattling their saber once again, I believe it is just that: saber-rattling. The US Can't Beat China If It's Scared of Trade. These five paths cover every possible way Beijing can reduce official purchases of U.S. government bonds: China can buy other U.S. assets, other developed-country assets, other developing-country assets, or domestic assets. They could start more aggressively selling US Treasuries. U.S. TreasuriesHere is how Peter Boockvar summed up the situation: In case you didn't see, on Friday at 4pm the Treasury International Capital flow data for July was released and it continues to be a big focus of . Feb. 13, 2009 1:22 PM ET 114 Comments. China reveals new rapid-fire drone launch system June 7, 2022; US, UK missiles to challenge Russia's 'god of war' June 6, 2022; South Korea has nuclear subs firmly in its sights June 6, 2022; China claims new AI can intercept hypersonics June 6, 2022; US-made parts keep Russia's artillery firing in Ukraine June 3, 2022 China follows with $1.08 trillion in its reserves. By "dollar reserves" I mean mostly Treasury securities (Treasuries) and to a lesser extent Agency securities (Fannie and Freddie) and cash dollars. China's reasons for routing . Why China Can't Dump U.S. Treasuries. The latest data shows that China's holdings of US Treasury securities fell to US$1.06 trillion in September, down from a peak of US$1.3 trillion in 2013, still representing a sizeable 15 per . This is nothing more than a balance sheet operation on the books of the Fed: Bank of China reserves at the Fed are debited and Bank of China treasuries are credited. TOKYO - The Japanese yen's sharp decline may be producing an unexpected loser: the US Treasury Department. by Wolf Richter Oct 8, 2015 12 Comments. The pace of dumping has intensified with some US$200 billion reduced in just past two months. They have now dumped Treasury paper for seven months in a row. According to the latest US Treasury TIC figures, out of a total foreign ownership of $7.09 trillion US Treasuries, China owns $1.073 trillion of which according to the Global Times $300bn will definitely be sold. China was . Russia Dumps Treasuries for Gold. America's top Asian bankers hold a combined $2.4 trillion in US Treasury debt and both have good cause to sell. I'm not saying we'll see no international trade, but it will be nothing like . The ongoing tit-for-tat tariff exchange between China and the US could push Beijing to strike back with the so-called 'nuclear option' - dumping its vast holdings of US Treasury bonds. However, the typical reason is China needs to support the Yuan (sell dollar and stabilize or increase the price of the Yuan) to stop capital flight. $1.32 trillion in late 2013. But there is something more sinister behind the move seen in U.S. bonds in September. Finally, of course, if China's dumping of Treasuries did have a serious impact as Brad W Setser points out in a good, though somewhat technical, piece for the Council on Foreign Relations then the . Russia and . China gradually sold off a chunk of its US Treasury holdings between mid-2014 and late 201610-year US Treasury yields fell for much of this stretch. Ireland, the UK and Switzerland followed suit. It would be transient, but in a market where the ten year return is around 2.8%, to have a spike that s. China may gradually cut its holdings of U.S. Treasury bonds and notes, in light of rising tensions between Beijing and Washington, state-backed newspaper Global Times cited experts as saying. Five large purchasers of US Treasuries - China, Russia, Norway, Brazil, and Taiwan - have changed their minds. This is unlikely to happen, but it did provoke a foreboding response from China. (Chart source, statista.com) Take the above chart for example, which shows just how much the United States imports from China each and every year. China claimed they were not "dumping the dollar" on purpose. China chooses U.S. Treasuries to invest in, versus real estate, stocks, and other countries' debt, because of their safety and stability. Text. . China further reduced its Treasury holdings to $1.18 trillion in . Rather than lose billions of dollars, China threatened to dump treasuries and sell the debt while it still can. Ahead of this week's Fed decision, China is now dumping unprecedented amounts of U.S. Treasuries. China on Wednesday ruled out the "nuclear" option of dumping its vast holdings of U.S. Treasury securities but called on Washington to be a responsible guardian of the dollar. China, ranked the second-biggest holder of US state debt, increasing its share to $1.08 trillion. No other option is possible. And at the fastest rate on record. Dumping their entirety of U.S. Treasuries on the market would have dire consequences for them as well. Many market commentators and conspiracy theorists are postulating that China might dump its rather significant holdings of US Treasuries as revenge for trade tariffs. The 10-year yield also fell between March 2018 and March 2019, as China's Treasury holdings fell by about $67 billion. With global investors like China having few good options besides United States Treasuries, Washington, despite its current debt-ceiling debacle, can continue to hold down interest rates and wallow . June 25, 2018. Over the past 12 months through October, they unloaded $318.2 billion: A 12-month selling spree in this magnitude has never occurred before. The yield on the benchmark 10-year U.S. Treasury note was at around 2.141 percent at the time of China's devaluation. The chart below shows the . However, according to The South China Morning Post, China has its own "range of financial firepower at its disposal to punish the US" for the tariffs war, including its massive $1.123 trillion piggybank of US Treasury bills. There is a domino effect. David Fessler. You see, when the dollar reigns supreme, countries like China and Russia unwittingly find themselves paying for U.S. military expansion. A $750 billion bond dump all at once could see interest rates rise much more than the brief 14% . In other words, say goodbye to China's dollar reserves. Not so fast. So a sort of a monetary shock, administered from China's dumping US Treasuries and thus pushing up US long-term yields, would solve that problem. All this brings us back to the Global Times 's threat to sell U.S. Treasuries. Read more about Beijing likely to dump US treasuries as US-China tensions soar: Report on Business Standard. asiatimes.com - TOKYO - The Japanese yen's sharp decline may be producing an unexpected loser: the US Treasury Department. After a four-month pause, the big March sell-off resumed a trend of Chinese Treasury divestment we saw in 2018. . It would be transient, but in a market where the ten year return is around 2.8%, to have a spike that s. China, the second largest non-U.S. holder of Treasuries, held $1.074 trillion in June, down from $1.083 trillion the previous month, according to latest official data
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