Socio-Economics History Blog

Socio-Economics History Blog

U.S. Yields Hit Fresh Highs on Report China May Slow U.S. Bond Purchases

by mosesman

  • U.S. Yields Hit Fresh Highs on Report China May Slow U.S. Bond Purchases
    by https://www.reuters.com/
    LONDON, Jan 10 (Reuters) – U.S. long-dated Treasury yields hit fresh 10-month highs on Wednesday with traders citing a report by Bloomberg that Chinese officials have recommended slowing or halting purchases of U.S. government bonds.
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    The yield on 10-year U.S. Treasuries hit a 10-month high of 2.588 percent in European trade and was up 4 basis points on the day.
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    “The latest rise (in yields) is caused by the news that Chinese official are recommending lower purchases of U.S. Treasuries for their FX reserves,” said Mizuho strategist Antoine Bouvet, referring to a Bloomberg report. “The market is pricing in this possibility, but we still don’t have much have detail on this.”
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    Reuters was unable to immediately verify the report. (Reporting by Abhinav Ramnarayan, Editing by Dhara Ranasinghe)
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  • Treasurys Tumble, Futures Slide On Report “China Said To Slow Or Halt Treasury Purchases”
    by Tyler Durden, https://www.zerohedge.com/
    The treasuries complex has sold off aggressively across the curve after the following flashing red Bloomberg headline:
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    – CHINA OFFICIALS ARE SAID TO VIEW TREASURIES AS LESS ATTRACTIVE.
    – CHINA OFFICIALS SAID TO RECOMMEND SLOWING OR HALTING TSY BUYING
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    As Bloomberg reports, “Officials reviewing China’s FX holdings have recommended slowing or halting purchases of US Treasuries, according to people familiar with the matter.”
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    The reasoning given is that the market for US government bonds is becoming less attractive relative to other assets, and trade tensions with the US may provide a reason to slow or stop buying American debt.
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    As Bloomberg further notes ‘The people didn’t specify why trade tensions would spur a cutback in Treasuries purchases, though foreign holdings of US securities have sometimes been a geopolitical football in the past.’
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    Some are interpreting this as the authorities wanting to send a signal to the US that they are willing to use financial means to respond to any shifts in US policy on issues such as trade.
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    read more.

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