Is China Selling Treasuries?

Treasury yields are spiking notably today with 30Y back above 3.00% and 10Y yields at 2.83% are near 3-week highs and along with the dismal indirect bids in the latest 3Y and 10Y auctions (i.e. foreigners not buying), some are suggesting today's move could be the start of China's move to unwind its Treasury holdings.

10Y yields up around 5bps...

 

30Y yields also up around 5bps, testing the recent down-channel...

 

But we also note that this could be RP funds bring bonds and stocks back together again...

 

BMO favors coming out of the auction process long with an even higher conviction that the yield curve will grind flatter from here. After all, we have yet to see any meaningful capitulation of the massive short-base in the longer-end of the Treasury market.

Additionally, BMO says that unless we see gains from a diverse variety of sources, we'll be wary of betting on CPI to keep performing and will look to sell 10-year breakevens over 2.15%.

Comments

Snaffew The_Juggernaut Thu, 04/12/2018 - 13:49 Permalink

I would be surprised if China's exports to the US dropped one tenth of one percent...America is addicted to Chinese shit and we have no manufacturing base and it would take a decade or two to rebuild one...that is, if Americans were willing to take a 75 percent pay cut, lose their medical, pensions, 401ks, paid maternity leave, sick time, vacation time and work at home status.  Not gonna happen.

In reply to by The_Juggernaut

OverTheHedge Consuelo Thu, 04/12/2018 - 13:34 Permalink

Insanely high interest rates attracted all available capital from the rest of the world. Worked like a charm. Nobody gave a flying fig about the industrial carnage and monster recession - as long as the squid got all the cash, the world was peachy. This was the eurodollar recycling that replaced the marshal plan recycling, and requires the US run a monster deficit for ever - that would be the Triffin dilemma.

Apologies if I sound like I know what I am talking about - this is not the case.

In reply to by Consuelo

LawsofPhysics Thu, 04/12/2018 - 12:30 Permalink

yes, they have been for quite a while. SO FUCKING WHAT?

The People's Bank of China has printed far more fiat currency than the Fed and the Fed can buy as much government debt as it wants!!!

A big nothing burger.

"Full Faith and Credit"

Same as it ever was!

LawsofPhysics HominyTwin Thu, 04/12/2018 - 12:50 Permalink

Other countries have been buying their own debt for fucking decades.

Again, SO WHAT? Fuck, debt "markets" were the first market to be destroyed by central bankers over a hundred years ago you stupid fuck. By comparison, the destruction of true price discovery is just catching up in other areas.  Moreover, are you another moron that actually believes in economic growth forever in a biosphere with finite resources?!?!?  LMFAO!!!!

What part of ALL fiat currency will die don't you understand?

We still have the resources and capital to make all kinds of stuff to sell/trade. I guess we simply need to exchange our products for something fucking real.  FUCK ALL FIAT and plastic crap from china!

In reply to by HominyTwin

Deep Snorkeler Archive_file Thu, 04/12/2018 - 15:33 Permalink

From 1966 to 1969 I owned a Greek Eliminator (Surfboards by the Greek, Huntington Beach).

Designed as a step-down nose rider it was the most amazing board I ever owned.

Besides nose riding, it had incredible speed and amazing bottom turn/cut back capabilities.

I'm surprised that it has been forgotten as a major technological marvel.

I surfed for ten years and have the shoulders to prove it.

In reply to by Archive_file

Pliskin Thu, 04/12/2018 - 12:59 Permalink

Err, you know, if you don't pay your debts, then people see you as a bad risk (or some kind of twat that doesn't pay his bills) and then they cut you off!

If amerika is 'cut off' then it is fucked!

Pay your debts, assholes!

Or get 'cut off''!!

Socialist scumbag, leeches,that you are!!

 

mailll Thu, 04/12/2018 - 13:27 Permalink

Who cares if they are selling treasuries.  What China doesn't buy, the federal reserve will buy with free money. If China wanted to sell all of their 1.17 trillion dollars in debt, the fed would buy every one of them.  The Fed controls our economy, not China.