If they are dumping then somebody is buying
The speculation was that Chinese selling of US Treasuries would lead to a spike in US interest rates. In reality, the collapse of subprime has led to that spike. US business now have to pay more to borrow, whereas Treasury rates are trending down. Why is this? Treasury rates were artificially high because domestic and foreign investors disdained Treasuries for higher-yielding mortgage assets or corporate bonds. Once credit issues surfaced, they rushed back into Treasuries. Cash is once again king. This means Treasuries are back in vogue, regardless of what the Chinese do. Say what you will about Treasuries, but they are the only instruments with the taxing power of the United States Federal government behind them. I’ll take that taxing power over the credit rating of any financial firm or industrial behemoth any day of the week.
Ping.
The current state of the Treasury market - with lower rates than just a few months ago - just shows that possession of Treasuries give the Chinese zero leverage. It’s just the best place for them to park their cash. I would love to see them park their cash elsewhere - that would simply be a case of them cutting off their collective noses just to spite their faces.
We’ve been trading real infrastructure for goods from overseas. The long-term vs. short-term gap is bridged with paper.
This is a message from China to get us to stop bothering them about their lead-filled products.
The squeeze has begun.
We should tell them to “Flip” off. imo
so 2.5 months later, gold up 22%, the Euro (vs. USD) up 9%, 30-year bond prices down roughly 50 basis points.....the big winner indeed is gold.