China’s holdings of US government securities are now the lowest they’ve been in two years at just $1.13 trillion. The Chinese have been selling treasuries that they own and not buying.
Theoretically that should hurt the US bond market and cause interest rates to go up. But, so far, it hasn’t happened. Why?
Right now there seem to be other investors around the world who want to buy our bonds as the Chinese are selling. And that’s a good thing.
Plus, the Chinese haven’t been unloading our bonds en masse. There’s no telling if there would be enough buyers for all $1.13 trillion of the remaining bonds.
China’s problem is: What would it do with the receipts from those sold bonds? Could the Chinese government find a safer place for its assets than in the US?
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