Moneycontrol Presented by Motilal Oswal
Days hours minutes
Nerolac
Presented by :

Co-Presenting Sponsor :

Capital Trade

Powered by :

Godrej Properties

Associate Sponsors :

Aegon Life
LIC Housing Finance
Indiabulls
DHFL

Co-Presenting Sponsor

Capital Trade

Associate Sponsors

  • Indiabulls
  • Aegon Life
  • LIC Housing Finance
  • DHFL
you are here: HomeNewsWorld
Jan 11, 2018 09:36 AM IST | Source: CNBC

China is reportedly thinking of halting US Treasury purchases and that's worrying markets

Bloomberg News reported Wednesday, citing people familiar with the matter, that officials in Beijing have recommended the Chinese government lower — or even stop — its buying of U.S. sovereign debt.

CNBC
The 'Great Firewall of China' is considered to be the most robust internet firewall mechanism in the world. China's objective is to limit people's access to foreign information sources, reduce effectiveness of foreign internet products and maintain
The 'Great Firewall of China' is considered to be the most robust internet firewall mechanism in the world. China's objective is to limit people's access to foreign information sources, reduce effectiveness of foreign internet products and maintain "Internet sovereignty". The Chinese government not only block websites, but also monitors internet access by individuals. Chinese internet companies such as Alibaba, Baidu and Tencent are believed to have immensely benefitted by ban on foreign rivals.

China, the biggest buyer of U.S. sovereign bonds, could be slowing down or even halting its purchases, according to a report.

Bloomberg News reported Wednesday, citing people familiar with the matter, that officials in Beijing have recommended the Chinese government lower — or even stop — its buying of U.S. sovereign debt.

The report also notes that Chinese officials think U.S. debt is becoming less attractive compared with other assets, adding that trade tensions between the two countries could provide a reason to slow down or halt the purchases.

"If China stops buying Treasuries, the market could suffer," strategists at Jefferies said. "Treasury financing needs are going to rise significantly in 2018 and beyond relative to recent history, so Treasury is going to be looking for as many sources of demand as they can find."

The news worried markets.

Treasury prices fell, boosting yields. The dollar also dropped against most currencies and gold rose. U.S. equities declined.

"I think the Chinese will contribute to the removal of liquidity from the U.S. bond market," said Michael Shaoul, chairman and CEO of Marketfield Asset Management. "That's not helpful to a bond market that's already under pressure."

A taper in Chinese purchases would come as the Federal Reserve unwinds the massive balance sheet it amassed after the financial crisis. The Fed is also expected to raise rates three times this year. In 2017, the central bank also hiked rates three times.

The U.S. 10-year yield rose to 2.56 percent on Wednesday, hitting levels not seen since last March. The dollar also fell against a basket of major currencies, trading down 0.2 percent at 92.28.
Sections
Follow us on
Available On