Loading ...Treasurys Tumble, Futures Slide On Report China “To Slow Or Halt” Treasury Purchases
The treasuries complex has sold off aggressively across the curve after the following flashing red Bloomberg headline:
– CHINA OFFICIALS ARE SAID TO VIEW TREASURIES AS LESS ATTRACTIVE.
– CHINA OFFICIALS SAID TO RECOMMEND SLOWING OR HALTING TSY BUYING
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.”
The reasoning given is that the market for US government bonds is becoming less attractive relative to other assets, while trade tensions with the US may provide a reason to slow or stop buying American debt.
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.”
The news has been interpreted as Beijing wanting to send a signal to the US that it is willing to use financial means to respond to any shifts in US policy on issues such as trade.