HongWu002
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Once the Biggest Buyer, China Starts Dumping U.S. Government Debt - WSJ
Let the Weimar hyperinflation begin!
Let the Weimar hyperinflation begin!
Once the Biggest Buyer, China Starts Dumping U.S. Government Debt
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terranMarine
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anon45
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Good news, these threats from uninformed Chinese posters that China can bankrupt the US by selling its fx reserves were getting tiring.
Now they can instead crow that they are ridding themselves of Dollar FX reserves and decoupling from the dollar to prepare the world for the reminbi global currency.
Now they can instead crow that they are ridding themselves of Dollar FX reserves and decoupling from the dollar to prepare the world for the reminbi global currency.
Good news, these threats from uninformed Chinese posters that China can bankrupt the US by selling its fx reserves were getting tiring.
Now they can instead crow that they are ridding themselves of Dollar FX reserves and decoupling from the dollar to prepare the world for the reminbi global currency.
The US would be bankrupted if it did something so stupid as to abrogate contracts between itself and China. China held treasuries to make sure you psychos wouldn't declare war, but they don't need so many assurances anymore.
Abu Zolfiqar
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Can someone let me borrow their WSJ account login infos? I cant access full article
anon45
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Bussard Ramjet
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You are an idiot, aren't you?
Right now, Dollar is getting stronger daily. Have you seen the performance of all other currencies against dollar?
Also, a large point of draw down of reserves is China's outflow of capital. Capital is leaving China, instead of entering it, for the search of safe haven.
This shows that people aren't confident to hold their wealth in China, even many Chinese who are pouring their wealth in advanced economies, buying property etc.
Right now, US dollar's role as the reserve currency has only increased, because all other countries are suffering from either near zero growths, or debt overload, or breakdown of trust.
China's blotched handling of stock market also led to total wipe out of trust.
Too bad foreigners never really had a foothold in the Chinese stock market, and capital has always been flowing out of China. What's your point?
Bussard Ramjet
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World financial system, especially regarding wealth, is built up on trust and confidence.
Right now, the perception about China is pretty negative. It doesn't matter what the truth is, or it aligns with perception, what matters is perception. People have zero trust on Chinese economic stats, and their mistrust has been worsened by the stock debacle.
So capital, especially in times of crisis, flocks towards safe havens, like the USD.
Right now, it is flowing out of China into USD, which is putting pressure on foreign reserves. This is the reason why Chinese foreign reserves are decreasing. USD is gaining against all currencies, and is increasing its foothold as the reserve currency in the world.
I was referring to the idiotic claim, that somehow their is depreciation in USD, which is totally false, as it has risen by record numbers against all currencies.
Hamartia Antidote
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Once the Biggest Buyer, China Starts Dumping U.S. Government Debt - NASDAQ.com
By Min Zeng And Lingling Wei
Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis.
Sales by China, Russia, Brazil and Taiwan are the latest sign of an emerging-markets slowdown that is threatening to spill over into the U.S. economy. Previously, all four were large purchasers of U.S. debt.
Few analysts expect much higher yields in the Treasury market as a result. Foreign private purchases of U.S. debt have increased amid pessimism about the world economic outlook. U.S. firms and financial institutions continue to buy Treasurys, as do some foreign central banks.
Still, many investors say the reversal in central-bank Treasury purchases stands to increase price swings. It could also pave the way for higher yields when the global economy is on firmer footing, they say.
Central-bank purchases over the past decade are widely perceived to have "helped depress the long-term Treasury bond yields," said Stephen Jen, managing partner at SLJ Macro Partners LLP and a former economist at the International Monetary Fund. "Now, we have sort of a reverse situation."
Foreign official net sales of U.S. Treasury debt maturing in at least a year hit $123 billion in the 12 months ended in July, according to Torsten Slok, chief international economist at Deutsche Bank Securities, the biggest decline since data started in 1978. A year earlier, foreign central banks purchased $27 billion of U.S. notes and bonds.
In the past decade, large trade surpluses or commodity revenues permitted many emerging-market countries to accumulate large foreign-exchange reserves. Many purchased U.S. debt because the Treasury market is the most liquid and the U.S. dollar is the world's reserve currency.
Foreign official purchases rose as high as $230 billion in the year ended in January 2013, the Deutsche Bank data show.
But as global economic growth weakened, commodity prices slumped and the dollar rose in anticipation of expected Federal Reserve interest-rate increases, capital flowed out of emerging economies, forcing some central banks to raise cash to buy their local currencies.
In recent months, China's central bank in particular has stepped up its selling of Treasurys.
The People's Bank of China surprised investors by devaluing the yuan on Aug. 11. The heavy selloff that followed-- triggered by concerns that Beijing would permit more weakening of the yuan to help spur growth--caught officials at the central bank somewhat off guard, according to the people.
To contain the selloff, the PBOC has been buying yuan and selling dollars to prevent the yuan from weakening beyond around 6.40 per dollar.
Internal estimates at the PBOC show that it spent between $120 billion and $130 billion in August alone in bolstering the yuan's value, according to people close to the central bank.
China isn't alone. Russia's holdings of all U.S. Treasury debt fell by $32.8 billion in the year ended in July, according to the latest data available from the U.S. Treasury. Taiwan's holdings dropped by $6.8 billion. Norway, a developed nation hit by the oil-price decline, reduced its Treasury holdings by $18.3 billion.
Some other central banks increased holdings. India increased its Treasury debt holdings to $116.3 billion at the end of July 2015 from $79.7 billion a year ago. The Federal Reserve held $2.45 trillion of Treasury debt at the end of September and isn't expected to sell U.S. debt soon.
Traders said China's selling has been a factor in why 10-year Treasury yields have remained near 2% as stock and commodity markets tumbled in recent months. The yield fell as low as 1.6% before the so-called taper tantrum in mid-2013 as the Fed prepared to end monthly bond purchases.
The 10-year yield settled at 2.033% Tuesday, compared with 2.173% at the end of 2014 and 3.03% at the end of 2013. Yields fall as prices rise.
Some analysts have warned for years that persistent fiscal deficits made the U.S. Treasury market vulnerable to a reduction in foreign purchases. But many investors say they believe longtime holders such as China won't sell bonds in a way that threatens to disrupt the market.
"I can't rule out China being a big risk to the bond market but it's not something that is keeping me awake at night," said James Sarni, senior managing partner at Payden & Rygel in Los Angeles, which manages $95 billion. "While they may decide to sell more Treasury bonds, the transactions are likely to be done in a prudent way."
Indeed, bond yields have remained persistently low for the past decade and have fallen sharply since the 2008 crisis, thanks in part to strong official and private demand for debt deemed safe.
In the 12 months to July, foreign private investors bought long-term Treasury debt at the fastest pace in more than three years.
U.S. bond mutual funds and exchange-traded funds targeting U.S. government debt have attracted $20.4 billion net cash this year through the end of September, poised for the biggest calendar-year inflow since 2009, according to fund tracker Lipper.
Sales by foreign central banks could accompany a further decline in bond yields, by underscoring the depth of economic problems hitting emerging regions. For over a decade before the recent slowdown, developing nations, led by China, were viewed as the engine for global economic growth.
"We have a problem of insufficient demand globally," said Michael Pettis, professor of finance at Guanghua School of Management at Peking University in Beijing and the author of "The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy."
Slack in the U.S. economy argues against a sharp rise in rates, said Prof. Pettis.
"U.S. bond yields are not going to rise significantly unless we have much stronger growth and higher inflation," he said.
Write to Min Zeng at min.zeng@wsj.com and Lingling Wei at lingling.wei@wsj.com
By Min Zeng And Lingling Wei
Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis.
Sales by China, Russia, Brazil and Taiwan are the latest sign of an emerging-markets slowdown that is threatening to spill over into the U.S. economy. Previously, all four were large purchasers of U.S. debt.
Few analysts expect much higher yields in the Treasury market as a result. Foreign private purchases of U.S. debt have increased amid pessimism about the world economic outlook. U.S. firms and financial institutions continue to buy Treasurys, as do some foreign central banks.
Still, many investors say the reversal in central-bank Treasury purchases stands to increase price swings. It could also pave the way for higher yields when the global economy is on firmer footing, they say.
Central-bank purchases over the past decade are widely perceived to have "helped depress the long-term Treasury bond yields," said Stephen Jen, managing partner at SLJ Macro Partners LLP and a former economist at the International Monetary Fund. "Now, we have sort of a reverse situation."
Foreign official net sales of U.S. Treasury debt maturing in at least a year hit $123 billion in the 12 months ended in July, according to Torsten Slok, chief international economist at Deutsche Bank Securities, the biggest decline since data started in 1978. A year earlier, foreign central banks purchased $27 billion of U.S. notes and bonds.
In the past decade, large trade surpluses or commodity revenues permitted many emerging-market countries to accumulate large foreign-exchange reserves. Many purchased U.S. debt because the Treasury market is the most liquid and the U.S. dollar is the world's reserve currency.
Foreign official purchases rose as high as $230 billion in the year ended in January 2013, the Deutsche Bank data show.
But as global economic growth weakened, commodity prices slumped and the dollar rose in anticipation of expected Federal Reserve interest-rate increases, capital flowed out of emerging economies, forcing some central banks to raise cash to buy their local currencies.
In recent months, China's central bank in particular has stepped up its selling of Treasurys.
The People's Bank of China surprised investors by devaluing the yuan on Aug. 11. The heavy selloff that followed-- triggered by concerns that Beijing would permit more weakening of the yuan to help spur growth--caught officials at the central bank somewhat off guard, according to the people.
To contain the selloff, the PBOC has been buying yuan and selling dollars to prevent the yuan from weakening beyond around 6.40 per dollar.
Internal estimates at the PBOC show that it spent between $120 billion and $130 billion in August alone in bolstering the yuan's value, according to people close to the central bank.
China isn't alone. Russia's holdings of all U.S. Treasury debt fell by $32.8 billion in the year ended in July, according to the latest data available from the U.S. Treasury. Taiwan's holdings dropped by $6.8 billion. Norway, a developed nation hit by the oil-price decline, reduced its Treasury holdings by $18.3 billion.
Some other central banks increased holdings. India increased its Treasury debt holdings to $116.3 billion at the end of July 2015 from $79.7 billion a year ago. The Federal Reserve held $2.45 trillion of Treasury debt at the end of September and isn't expected to sell U.S. debt soon.
Traders said China's selling has been a factor in why 10-year Treasury yields have remained near 2% as stock and commodity markets tumbled in recent months. The yield fell as low as 1.6% before the so-called taper tantrum in mid-2013 as the Fed prepared to end monthly bond purchases.
The 10-year yield settled at 2.033% Tuesday, compared with 2.173% at the end of 2014 and 3.03% at the end of 2013. Yields fall as prices rise.
Some analysts have warned for years that persistent fiscal deficits made the U.S. Treasury market vulnerable to a reduction in foreign purchases. But many investors say they believe longtime holders such as China won't sell bonds in a way that threatens to disrupt the market.
"I can't rule out China being a big risk to the bond market but it's not something that is keeping me awake at night," said James Sarni, senior managing partner at Payden & Rygel in Los Angeles, which manages $95 billion. "While they may decide to sell more Treasury bonds, the transactions are likely to be done in a prudent way."
Indeed, bond yields have remained persistently low for the past decade and have fallen sharply since the 2008 crisis, thanks in part to strong official and private demand for debt deemed safe.
In the 12 months to July, foreign private investors bought long-term Treasury debt at the fastest pace in more than three years.
U.S. bond mutual funds and exchange-traded funds targeting U.S. government debt have attracted $20.4 billion net cash this year through the end of September, poised for the biggest calendar-year inflow since 2009, according to fund tracker Lipper.
Sales by foreign central banks could accompany a further decline in bond yields, by underscoring the depth of economic problems hitting emerging regions. For over a decade before the recent slowdown, developing nations, led by China, were viewed as the engine for global economic growth.
"We have a problem of insufficient demand globally," said Michael Pettis, professor of finance at Guanghua School of Management at Peking University in Beijing and the author of "The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy."
Slack in the U.S. economy argues against a sharp rise in rates, said Prof. Pettis.
"U.S. bond yields are not going to rise significantly unless we have much stronger growth and higher inflation," he said.
Write to Min Zeng at min.zeng@wsj.com and Lingling Wei at lingling.wei@wsj.com
Very pertinent.
And i think there is another thread started by our friend Hongwu, can we merge it with this thread? Let's try to repudiate any instance of redundancy.
Once the Biggest Buyer, China Starts Dumping U.S. Government Debt
the u.s. is the biggest debtor nation in the history of the world. the fed is running a ponzi scheme, inflated a huge asset bubble that will burst sooner or later.
the u.s. can never raise its interest rate. yellen, the fed is lying and bluffing. they tell the world that they gonna raise rate but if they do the u.s. economy will go bust, dollar will collapse. its wise to dump us debt and move away from the dollar.
the u.s. can never raise its interest rate. yellen, the fed is lying and bluffing. they tell the world that they gonna raise rate but if they do the u.s. economy will go bust, dollar will collapse. its wise to dump us debt and move away from the dollar.
Beidou2020
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Good news, these threats from uninformed Chinese posters that China can bankrupt the US by selling its fx reserves were getting tiring.
Now they can instead crow that they are ridding themselves of Dollar FX reserves and decoupling from the dollar to prepare the world for the reminbi global currency.
China has kept US inflation low by absorbing the excess dollars as a result of QE. To run big deficits you need a buyer that can buy the large issuance of bonds. US has printed money and bought its own bonds and exported the inflation and China has been the biggest absorber of that inflation.
By ridding of US bonds, China is no longer absorbing the US inflation which means that QE will have a far greater cost on the US.
US is already bankrupt. It's being propped up with massive money printing to keep the deficits going to maintain the empire and keep the cost of funding those deficits small. Otherwise the interest payments on those bonds will eat up a significant part of US fiscal revenues.
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