China dumps US Treasuries at fastest pace in two years

Financial Times/Joe Rennison and Colby Smith

“Except for a small net purchase in February, China has now sold Treasuries every month since September. A fear in the US is that China could ramp up its sales of Treasuries in an attempt to disrupt the market and put upward pressure on US interest rates, in effect raising borrowing costs for Washington.”

USAGOLD note:  Financial Times points out that the yuan remained flat during March when the liquidations were conducted hinting at a connection with trade negotiations.  FT quotes Deutche Bank’s Torsten Slok as saying “Normally the answer to why this has happened has been very similar — it’s been the exchange rate. This time the number is more surprising. There are a lot of open questions.”  There is another question not covered in the articles we have read on this subject:  Will sales by China prompt sales from other nation states as part of the de-dollarization trend? At the moment, foreign invetors hold over $6 trillion in U.S. debt paper, as shown in the chart below.

Repost from 5-17-2019

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