China Won't Use Treasuries to Warn Trump, Eurasia Group Says

A broker looks at a graph on his computer screen on the dealing floor at ICAP in London

China Won't Use Treasuries to Warn Trump, Eurasia Group Says

China owns nearly $1.2 trillion of USA government debt, more than double the level from a decade ago, with most of the buildup coming as the nation boosted foreign-exchange reserves to help offset a strengthening yuan.

Elsewhere, the euro rose around half a cent against the weaker dollar, with rising 0.24% to 1.1965.

Yields on 10-year Treasuries ended Wednesday little changed at about 2.56 percent, pulling back from close to the highest levels since 2014, and were at 2.53 percent Thursday in Asian trading.

BITCOIN: Bitcoin prices gyrated, sinking about 13 percent according to website Coindesk, after South Korea's justice minister said it plans to ban crypto currency trading.

It added that "China's forex reserves management departments are responsible investors".

"The authenticity of the report is somewhat questionable given the nature of such information getting into the public domain would not be in the interest of either SAFE, or the PBoC", say Richard Grace and Elias Haddad, chief currency strategist and senior currency strategist respectively at Commonwealth Bank of Australia.

"There are also clear negative consequences for the value of the United States dollars, which would concern China".

There is of course a historical precedent of such tactics backfiring on those who employ them. "But it's a market where investors don't get much of a return".

Mauricio Pochettino backs Harry Kane to break Premier League season goals record
Everton had the ball in the net eight minutes later, but it was ruled out for offside. In this way, he will break all the records in the Premier League .

And while 2018 has brought some telegraphed risks into sharper focus, nothing has rocked the foundation of the $14.5 trillion Treasuries market, said Aaron Kohli, an interest-rate strategist at BMO Capital Markets in NY.

This has been credited with driving the gold price to decades long low before the auctions took place, and cheating the British taxpayer out of the full value of its gold holdings.

But any attempts to use that power could hurt the dollar, damaging China's own USA holdings.

The Bloomberg report said that trade tensions between the two countries could provide a reason for Beijing to slow down or halt the purchases. Estimates say China now holds around $1.2 trillion (€1.0 trillion) in USA debt, an amount that has doubled over the past 10 years.

Bloomberg News reported on Wednesday that Chinese officials reviewing the country's vast foreign exchange holdings have recommended slowing or halting purchases of U.S. Treasury bonds.

The 10-year note yielded 2.56% at about 2 NY, little changed on the session and down from as high as 2.595% earlier.

SAFE officials noted that "the handling of China's foreign reserves investment in USA bonds is professionally managed according to market activity, on the basis of market conditions and investment needs".

"The flush of money is being met by a flush of supply, and that produces higher rates", he said, noting that central banks have injected $14 trillion of liquidity into the market over the past five years.

Latest News