With China Exiting U.S Bonds.. could this pan out?

BlueJaysBlueJays Posts: 82 Bronze ✭✭✭
Treasury securities are sold in many maturities, ranging from 30 days to 30 years. I wonder if the Chinese could shift the mix of their treasury holdings from longer to shorter maturities without selling a single bond and without reducing their total holdings. As each long-term note matures, China could reinvest in three-month instruments (short term) without reducing its total investment in treasuries. The shorter maturities are less volatile, meaning the Chinese would be less vulnerable to market shocks. This shift would also make the Chinese portfolio more liquid, which would facilitate to Chinese exit from treasury securities. QE anyone? quarter of a trillion in bonds sold by Chinese already, could the fed be experimenting right now to see if the 0.25% hike attracts new bondholders due to yield? time will tell..

Comments

Sign In or Register to comment.