China Calls Slowing Treasury Purchases Report "Fake News", Yields Slide

Less than 24 hours after Bloomberg headlines rang around the world proclaiming China would "slow purchases" of US Treasuries, China’s State Administration of Foreign Exchange, SAFE, pushes back on the report, saying it is "fake news."

As Blooomberg reports, SAFE says its investment in Treasuries is based on market conditions and its needs, and adds that it always diversifies investment of FX reverses.

Additionally, SAFE says the earlier report may have quoted a wrong source.

Reuters headlines provide a little more color:

  • CHINA'S FX RESERVES MANAGEMENT DEPARTMENTS ARE RESPONSIBLE INVESTORS -FX REGUATOR: RTRS
  • CHINA HAS BEEN DIVERSIFYING ITS FX RESERVES INVESTMENTS: RTRS
  • CHINA FX REGULATOR SAYS INVESTMENTS IN U.S. TREASURIES MARKET DRIVEN. CHINA HAS BEEN DIVERSIFYING ITS FX RESERVES INVESTMENTS: RTRS
  • REPORT ON CHINA CONSIDERING REDUCING OR STOPPING PURCHASES OF U.S. TREASURIES COULD BE BASED ON WRONG INFORMATION -CHINA GOVT SOURCE: RTRS

Following is a translation of a statement from China’s State Administration of Foreign Exchange in response to a report that said China may slow or halt purchases of U.S. treasuries.

"We are also aware of the news through some media reports. We think the report might have cited wrong sources or may be fake news.

"China has always managed its forex reserves investments in accordance with the principle of diversification, to ensure the overall safety of FX assets, to maintain and increase their value. Like other investments, FX reserves investments in U.S. treasuries is managed in a professional way according to market conditions and investment needs. China’s FX reserves management department is a responsible investor both for the FX reserves and for the market in which it participates. China’s investments have promoted the stability of international financial markets and the preservation and appreciation of China’s foreign exchange reserves."

US 10Y Yields immediately tumbled 2bps, well below the pre-China-headlines levels from this morning...

https://www.zerohedge.com/sites/default/files/inline-images/20180110_10Y_0.png

 

And Treasury futures volume surged...

 

https://www.zerohedge.com/sites/default/files/inline-images/20180110_10Y1.png

Presumably, Beijing's message was heard loud and clear (and acknowledged) in Washington.

Comments

ggw9225 Jan 10, 2018 11:17 PM Permalink

The countless stories of how China is tapering its purchases of bonds that I've seen on ZH over the years is enough to tell me this isn't fake news. 8 days until the launch of the petro-Yuan. Seems more like a shot across the economic bow. 

MuffDiver69 Jan 11, 2018 12:03 AM Permalink

First a big buy on treasuries when “reports” had the bottom falling out and then I was “analyzing” the situation this morning, add in the ZH article on what was probably going on and it was more “fake news”...I watch this crap with amazement honestly. 

squid Jan 11, 2018 12:09 AM Permalink

Like I've said b4, ignore what the Chinese say.....

watch what they do.

If they talk down gold, it means they're going to buy.

If they talk down the 10 year it means they going to...?

 

Squid

MK13 Jan 11, 2018 12:14 AM Permalink

China has tapered buying us treasuries for several years, look at official holdings, doh!

'We will debt the obvious'.

And dollar is going up.

JIMSJOE2 Jan 11, 2018 2:03 AM Permalink

As I posted yesterday I would not be surprised if this is fake news just like Bloomberg and other MSM plus even the alt media jumped on the fake China news about them backing the new crude futures contract with gold and allowing the yuan to be fully convertible to gold. All fake news. The MSM uses these stories to promote a narrative and also to move markets. What gets me is how many of the alt media sites fall for this hook, line and sinker without doing any critical thinking or meaningful research. They always claim that the rest of the population are sheeple but in reality who is being led to slaughter?

GotAFriendInBen Jan 11, 2018 6:12 AM Permalink

So when do futures take off in response to this great non-fake news?

Oh hell

Let's use it to lift the cash market. Give the sheepie some real fun

CNBC heads lubing their jaws in advace