Comments on: China cuts holding of U.S. Treasury securities http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: Anonymous http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56883 Anonymous Sat, 22 Aug 2009 05:44:00 +0000 http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56883 Thanks Ed. Given that the treasury yield is so low, if Yuan is going to appreciate, then the first thing china going to do is to sell all their treasury to the market or to the Fed. 3% appreciation in yuan implied they get virtually nothing (not accounting for all the transaction fees). There is an article from Michael Pettis two days ago. And it may worth to read, Ed. http://mpettis.com/2009/08/yet-another-discussion-on-the-asian-savings-glut-hypothesis-and-why-it-matters/ Thanks Ed.

Given that the treasury yield is so low, if Yuan is going to appreciate, then the first thing china going to do is to sell all their treasury to the market or to the Fed.

3% appreciation in yuan implied they get virtually nothing (not accounting for all the transaction fees).

There is an article from Michael Pettis two days ago. And it may worth to read, Ed.

http://mpettis.com/2009/08/yet-another-discussion-on-the-asian-savings-glut-hypothesis-and-why-it-matters/

]]> By: hbl http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56878 hbl Fri, 21 Aug 2009 18:01:00 +0000 http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56878 <i>"But, as you have probably noticed, interest rates have not increased appreciably. What gives?"</i> Hi Ed, I'm a bit of a broken record, but I think one of the biggest reasons is that private borrowing has been contracting faster than public borrowing has been expanding, so treasuries end up replacing other disappearing assets on many balance sheets: http://www.thoughtofferings.com/2009/08/why-treasuries-find-buyers-and-interest.html “But, as you have probably noticed, interest rates have not increased appreciably. What gives?”

Hi Ed,

I’m a bit of a broken record, but I think one of the biggest reasons is that private borrowing has been contracting faster than public borrowing has been expanding, so treasuries end up replacing other disappearing assets on many balance sheets:

http://www.thoughtofferings.com/2009/08/why-treasuries-find-buyers-and-interest.html

]]> By: S. Lagavulin http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56870 S. Lagavulin Thu, 20 Aug 2009 16:56:00 +0000 http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56870 Actually, the biggest factor keeping interest rates in check is that the US has become the prime buyer of its own securities. There's been speculation on this for over a year now, and the Fed is finally owning up to it publicly. There's nothing shady about the practice, it's done all the time to roll over maturities and such, but the sheer volume of transactions, as well as the (very shady) suspicions as to how much buying in the last year was flooding in from unnamed off-shore sources like the Cayman Islands, lends credence to the belief that the Fed isn't just trying to create stability but more likely is acting like a credit card junkie, shuffling the debt from one account to another in order to stave-off the collectors as long as possible. Actually, the biggest factor keeping interest rates in check is that the US has become the prime buyer of its own securities. There’s been speculation on this for over a year now, and the Fed is finally owning up to it publicly.

There’s nothing shady about the practice, it’s done all the time to roll over maturities and such, but the sheer volume of transactions, as well as the (very shady) suspicions as to how much buying in the last year was flooding in from unnamed off-shore sources like the Cayman Islands, lends credence to the belief that the Fed isn’t just trying to create stability but more likely is acting like a credit card junkie, shuffling the debt from one account to another in order to stave-off the collectors as long as possible.

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56865 Edward Harrison Thu, 20 Aug 2009 16:00:00 +0000 http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56865 I didn't link to that one but I agree they are trying their best to diversify away from U.S. dollar financial assets. The truth is there are few ways to do so given how much surplus they are accumulating. Obviously, if they really wanted to avoid this problem, they would let their currency appreciate. In many ways, their dollar problem is one of their own making. I didn’t link to that one but I agree they are trying their best to diversify away from U.S. dollar financial assets. The truth is there are few ways to do so given how much surplus they are accumulating. Obviously, if they really wanted to avoid this problem, they would let their currency appreciate.

In many ways, their dollar problem is one of their own making.

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56864 Edward Harrison Thu, 20 Aug 2009 15:58:00 +0000 http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56864 Your point is semantics. Net sales is all that matters in regards to the debate on Chinese holdings. Your point is semantics. Net sales is all that matters in regards to the debate on Chinese holdings.

]]> By: Anonymous http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56860 Anonymous Wed, 19 Aug 2009 15:47:00 +0000 http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56860 not sure if you have linked the news that china has made a $41Billion contact with Australia in Natural gas. http://www.abc.net.au/news/stories/2009/08/18/2659831.htm It seems the Chinese are really serious about diversifying their reserves. Man not sure if you have linked the news that china has made a $41Billion contact with Australia in Natural gas.

http://www.abc.net.au/news/stories/2009/08/18/2659831.htm

It seems the Chinese are really serious about diversifying their reserves.

Man

]]> By: Mark Brown http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56859 Mark Brown Wed, 19 Aug 2009 05:22:00 +0000 http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56859 Since the beginning of the year, we've seen a slow but steady rise in the interest rates of US Treasurys. In June, there was actually a fairly quick rise, and then a sell off as the rates regressed to the mean - but the mean is an upward sloping curve. See here: http://stockcharts.com/charts/performance/USBonds.html Since the beginning of the year, we’ve seen a slow but steady rise in the interest rates of US Treasurys. In June, there was actually a fairly quick rise, and then a sell off as the rates regressed to the mean – but the mean is an upward sloping curve. See here: http://stockcharts.com/charts/performance/USBonds.html

]]> By: Hans Walter http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56856 Hans Walter Tue, 18 Aug 2009 13:23:00 +0000 http://www.creditwritedowns.com/2009/08/china-cuts-holding-of-u-s-treasury-securities.html#comment-56856 China's reduced dollar amount of U.S. Treasury securities DOES NOT mean they're selling, not necessarily. It could simply mean they're not renewing expiring notes. China’s reduced dollar amount of U.S. Treasury securities DOES NOT mean they’re selling, not necessarily. It could simply mean they’re not renewing expiring notes.

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