Wednesday, August 26, 2015

China Has Dumped $100 Billion
in U.S. Treasury Bonds in 2 Weeks
Article with references by SocGen suggests China has been selling U.S. Treasury bonds .. is more coming? .. SocGen: From an operational perspective, China's FX reserves are estimated to be two-thirds made up of relatively liquid assets. According to TIC data, China held $1,271bn U.S. treasuries end-June 2015, but treasury bills and notes accounted for only $3.1bn. The currency composition is said to be similar to the IMF's COFER data: 2/3 USD, 1/5 EUR and 5% each of GBP and JPY. Given that EUR and JPY depreciation contributed the most to the RMB's NEER appreciation in the past year, it is plausible that the PBoC may not limit its intervention to selling only USD-denominated assets." .. Zero Hedge projects China could continue this pace of selling for 18 months - "What happens when China liquidates all of its Treasury holdings is anyone's guess, and an even better question is will anyone else decide to join China as its sells U.S. Treasurys at a never before seen pace, and best of all: will the Fed just sit there and watch as the biggest offshore holder of U.S. Treasurys liquidates its entire inventory."
LINK HERE to the article

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