While fear grows of a bear market in bonds, already helped by the Federal Reserve’s plans to unwind its massive balance sheet and raise rates as many as three times this year, there’s now another reason for markets to worry.
Senior government officials in Beijing have recommended halting or slowing purchases of US treasuries, according to a report from Bloomberg, which cited people familiar with the matter.
China, the world’s largest foreign holder of US debt, regularly assesses its strategy for investing its US$3.1 trillion of foreign-exchange reserves. It is not yet clear whether officials have made a decision on the recommendations.
“Today’s headlines will underscore concerns that the fading global quantitative-easing bid will trigger lasting upside pressure on developed-market yields,” Commerzbank strategist Michael Leister was quoted as saying.
The yield on the 10-year Treasury climbed 4 basis points on the news, hitting levels not seen since March of last year. The increase follows a rise on Tuesday driven by the Bank of Japan’s decision to trim its purchases of long-term bonds, as the Financial Times reported.
Pedant!
If I were Janet Yellen I would thank the Chinese regime for his contribution in buttressing the current policy of interest rate increases. However, and as China knows this beforehand its Central Bank would not be wise embarking on a policy of treasury purchaes for practical reasons. Its own domestic economy needs to absorb a chunk of the country’s export income ro support its monetary poiicy into domestic infrastructure projects.
2- Known beforehand that a policy of interest rate increaes is on , it would not be very convenient to implement a policy of purchasing treasuries; at best it could be short term paper in the secondary markets while longer term maturities willl have to wait until they get a sense of what’s going on.
Oh what a great story.
Would help a lot, for its credibility if your spelling was up to par.
Don’t you have a spell checker?
Done on a Mandarin keyboad/computer?
Oh OK.
Just so you know, ‘breaks’ is when something malfunctions. but ‘brakes’ is to slow down.
I think you mean ‘putting brakes on US … blah blah.’
Spell checker, right?