Is Fear of China Selling Treasurys Overdone?

WSJ ^ | Min Zeng

[BenLurkin]

China is stirring up the U.S. Treasury market’s pot again.

Early last week, sales from China were blamed by traders on why the rally in long-term Treasury debt was muted despite a sharp plunge in global stocks and crude oil prices. Tuesday, the movements in bond market prices again raised speculation that China was in the market selling bonds again to keep in check the bond market’s price strength.

While the sales help explain why long-term U.S. bond yields have failed to drop sharply over the past few weeks, analysts and traders don’t expect yields to rise significantly. The bond market has attracted buyers to preserve capital as worries over China’s slowing economy and stock market turmoil and its fallout globally have rattled sentiment toward global growth outlook.

The yield on the benchmark 10-year Treasury note earlier fell to 2.152% amid a global stock market selloff but settled Tuesday at 2.174%, down modestly from 2.204% on Monday. The Dow was recently down over 2% and U.S. crude benchmark settled more than 7% lower.

More strikingly was the 30-year Treasury bond which was shut from the safe-haven flows. The 30-year yield was little changed at 2.933% from 2.939% Monday.

“There is clear footprint of a seller liquidating their long bond holdings. We don’t know who it is, but the suspect has been China,” said Jason Evans, co-founder of hedge fund NineAlpha Capital.

[Eric in the Ozarks]

Hope they take a bath.

[Obadiah]

Oh yeah, there’s nothing to fear. Please dump all your money into stocks, and don’t believe that old saw about “pump and dump”. The economy is great!!

[Soul of the South]

How much of the Chinese liquidation is the Federal Reserve absorbing with printed money?

[zzwhale]

FEAR of WHAT?
the Fed’s printing presses overheating.???????