“Bond pros have been watching the data for clues as to whether China would dump Treasury securities to retaliate against U.S. tariffs, but the July data does not indicate a major move, several strategists said.”
USAGOLD note: Japan not China has been the leader in reducing bond holdings over the past two years. China has actually added marginally to its holdings over the period. . . .See below. That said, we still do not know how China is likely to react to the current trade war pressures. The greatest danger to the bond market could very well become Chinese and Japanese bond liquidations to prop up their currencies and discourage capital flight – an economic necessity rather than a wilful retaliation.