Former PBoC advisor:Treasuries Lack Safety, Liquidity for China

Discussion in 'Wall St. News' started by ASusilovic, Aug 3, 2010.

  1. Aug. 3 (Bloomberg) -- U.S. Treasuries fail to provide safety or liquidity when it comes to managing China’s $2.45 trillion foreign-exchange reserves, said Yu Yongding, a former central bank adviser.

    “I do not think U.S. Treasuries are safe in the medium-and long-run,” Yu, a member of the state-backed Chinese Academy of Social Sciences, wrote yesterday in an e-mailed response to questions. China is unable to sell the securities in a “big way” and a “scary trajectory” of budget deficits and a growing supply of U.S. dollars put their value at risk, he said.

    Ouch. Do I smell a danger sign here ?


    The cost of pegging the Chinese currency to the dollar is “intolerably high” and threatens the welfare of Chinese people, Zhang Ming, deputy chief of the International Finance Research Office at the Chinese Academy of Social Sciences, wrote today on the website of China Finance 40 Forum.

    “The U.S. government has strong incentives to reduce its real burden of debt through inflation and dollar devaluation,” he said. “Whichever way it is, the yuan-recorded market value of Treasuries will fall, causing huge capital losses to China’s central bank.”

  2. What ever that guy says, I would not be surprised if the opposite will be true. I would also not rule out that he is saying hoping that it triggers a selloff, thus allowing their bank to buy more US debt. I would Follow what they do, not what they say.
  3. Short 10 yr at 124.00. First target 121.18.
  4. When foreign investors become bearish towards foreign know the rest. :eek:
  5. Will you still have that position on at 7:29am (Chicago Time) this coming Friday? :confused: :eek: