Earlier this week, the editor in chief of the Global Times, a state-aligned Chinese tabloid, said Chinese scholars were looking into the possibility of China dumping US Treasurys.
UBS looked at The Federal Reserve’s tapering to try and figure out what kind of impact China selling $1.1 trillion of Treasurys would have on the bond market, and concluded the 10-year yield could rise by up to 40 basis points.
Bloomberg’s Joe Weisenthal thinks yields could actually fall if China sold its holdings.
The debate is likely for naught as China needs to hold Treasurys, according to one analyst.
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Chinese scholars are reportedly looking into the so-called nuclear option in the trade war — Beijing dumping US Treasurys.
“Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically,” Hu Xijin, the editor in chief of the state-aligned Chinese tabloid Global Times, tweeted on Monday, setting off a debate about what the consequences would be if China divested its holdings.
While UBS strategists think its unlikely China would sell the entirety of its holdings, they looked into what could happen just in case. To do so, they looked at the …read more
Source:: Businessinsider – Politics