China SELLS (you read that correctly) US bonds to 'show concern'

Discussion in 'Wall St. News' started by reiser999, Jun 17, 2009.

  1. Here is the AFP story:

    BEIJING (AFP) — A decision by China to reduce its US Treasury holdings suggests concern about the US attitude towards its economic woes, Chinese economists were quoted as saying in state media Wednesday.

    The remarks, coming after US data showed a modest decline in Chinese investments in US government bonds, were in contrast to an earlier statement in Beijing which had said the recent sell-off was a routine transaction.

    "China is implying to the US, more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar," He Maochun, a political scientist at Tsinghua University, told the Global Times.

    According to US Treasury data issued Monday, Beijing owned 763.5 billion dollars in US securities in April, down from 767.9 billion dollars in March.

    It was the first month since June 2008 that Beijing failed to purchase more US T-bills.

    Zhang Bin, a researcher at the Chinese Academy of Social Sciences, said China's move showed a more cautious attitude.

    "It is unclear whether the reduction will continue because the amount is so small. But the cut signals caution of governments or institutions toward US Treasury bonds," Zhang told Xinhua news agency.

    China's foreign ministry said Tuesday that its purchases of US Treasuries remained based on "security, liquidity and value preservation".

    For Zhao Xijun, deputy director of the Finance and Securities Research Institute of People's University, China may have reduced its holding of US Treasuries simply because it needed the money.

    Zhao said the sell-off could have been in order to pay for its own economic stimulus package.

    "The reduction was a result of composite factors, such as the investment need and the market change," Zhao told Global Times.

    Is this the beginning of the end?
  2. I don't think it is the beginning of the end.

    Seems to me like the news is trying to cause a panic again, seems routine or for need of money.

    With over 60% of their economy export based, they need money.

    In addition, it would hurt the Chinese (themselves) more by selling heavily and causing more selling from other nations. They hold A LOT of treasuries and selling would only hurt their own position....something they don't want to do.

    My take, they'll let their treasuries mature and then perhaps move their money elsewhere.

    2 cents.

  3. The Chinese ordered the money printing.

    "Save Fannie and Freddie uncle Ben."
  4. LOL !

    And by the way : selling T Bonds after rallying to multi, mutli, multi years highs is not a wrong idea...especially if we are still expecting V recovery....