Monday, 22 January, 2018

Reports say China may slow US Treasury purchases, trade tensions cited

Reuters Reuters
Preston Stone | 11 January, 2018, 06:12

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

Major indexes on Wall Street finished in the red on Wednesday as investors grew anxious after Bloomberg reported that China, the world's biggest foreign holder of U.S. Treasuries, could slow or halt U.S. government bond purchases. The report suggests that China feels USA debt is becoming less attractive when compared to other types of investments.

Bloomberg notes that trade tensions with the US may provide a reason to slow or stop buying the debt of the USA government.

Investors monitor stock prices in a brokerage house in Beijing on January 2, 2018.

"If China stops buying Treasuries, the market could suffer", strategists at Jefferies said. "A significant change in policy could put considerable upside pressure on USA yields". Japan was second with US bond holdings worth $1.09 trillion. Instead of just stopping its purchases of United States debt, it could start selling some of the paper it has. "For years they have been bothered by the fact that they are so heavily invested in one particular class of US bonds, so it's just a question of time before they would try to diversify".

Further out along the interest rate curve, yields on the 30-year Treasury bond was up by four basis points to 2.94%.

But Erlam says it is too "early to speculate" on the likelihood that China will "suddenly" reduce its holdings.

The $14 trillion Treasury market has been roiled in the past 48 hours.

While the yen's move the previous day was in line with the BoJ's subtle reduction in its bond buying over the past year, or "stealth tapering", the reaction highlighted how sensitive markets are to a pullback in Japan's massive stimulus.

Tsunami alert after magnitude 7.6 natural disaster rocks Caribbean Sea north of Honduras
The northern coast of Honduras closest to the quake's epicentre is sparsely populated, with much of it covered by nature reserves. Tsunami warnings were issued for the Cayman Islands, Puerto Rico, Jamaica , the Caribbean islands, Central America, and Mexico.

That's given USA 10-year yields a push once again, as it jumps to day's high of 2.5715%.

Stocks also dipped, with the Dow Jones industrial average tumbling almost 129 points before cutting those losses sharply to around a 25-point deficit around 11:45 a.m. EST.

China added to bond investors' jitters on Wednesday as traders braced for what they feared could be the end of a three-decade bull market.

"You already had this backdrop of rising rates and people are getting nervous", says Boris Rjavinski, senior interest rate strategist at Wells Fargo Securities in NY.

And China could get even tougher.

Against a basket of currencies, the dollar fell 0.6 percent, its biggest drop in a month, its losses sustained mostly due to a stronger yen.

"This happens every time rates go up", Paulsen explains.

But, Hong Kong and China's key indexes fared better.

"The U.S. Treasury market is a deep, robust market within the world and so we are confident that our economy, with the economy strengthening, that it will remain a deep, robust market", Malpass said when asked to comment on the report.

Recommended

Million Euro jewels stolen in armed raid on Ritz Hotel in Paris Million Euro jewels stolen in armed raid on Ritz Hotel in Paris Another employee said he saw a motorbike speed along a road at the back of the hotel after the break-in. Paris prosecutors have opened a probe into the robbery, according to a judicial source.

LG's take on the Google Assistant-powered smart display is pretty boring LG's take on the Google Assistant-powered smart display is pretty boring Lenovo was the one of the first companies to unveil a Google Assistant powered Smart Display , with their yet-to-be-named product. The LG Smart Ecosystem has been contributing to the smart home industry in many ways.

'All signs point to' Matt Patricia being named Giants coach 'All signs point to' Matt Patricia being named Giants coach According to Pat Leonard of New York Daily News , Patricia will become the next head coach of the New York Giants . Nothing official can occur with Patricia until the Patriots are eliminated from the playoffs.

OJ Simpson Has Addressed The Rumour He's Khloe Kardashian's Actual Father OJ Simpson Has Addressed The Rumour He's Khloe Kardashian's Actual Father Simpson's ties to the Kardashian family ran deep many years ago, as he was a close personal friend to the late Robert Kardashian . Simpson is secretly Khloe Kardashian's biological father, but Simpson insists that the rumors are just that - rumors.

Canada increasingly convinced Trump will pull out of NAFTA Canada increasingly convinced Trump will pull out of NAFTA Mexico has previously said it would walk away if Trump formally announced Washington meant to quit. The Canadian dollar rose 4.2 cents to 0.79.74 USA dollar.

Dr. Dre and Jimmy Iovine attend Warriors' practice together Dr. Dre and Jimmy Iovine attend Warriors' practice together Billboard cites an interview with Iovine back in September that his focus was bringing music streaming up to speed. Apple Music is now second in music streaming behind Spotify, who now has 70 million monthly paid subscribers.

MLB Rumors: Astros To Land Gerrit Cole In Trade Despite Yankees' Interest MLB Rumors: Astros To Land Gerrit Cole In Trade Despite Yankees' Interest He finished with a 2.60 ERA, 1.09 WHIP and 202 strikeouts in 32 starts and 208 innings, all of which were career bests. Cole also contributed to Pittsburgh's 2013 postseason run, making two October starts as a rookie.

Pokémon Go will drop support for older iPhones and iPads Pokémon Go will drop support for older iPhones and iPads This is due to the fact that the Pokemon GO app now pushes the power of the older operating systems beyond their capabilities. In addition to the iPhone 5 and 5c, this change affects first-, third-, and fourth-generation iPads, plus the iPad 2.

Seahawks fire OC Bevell, OL coach Cable Seahawks fire OC Bevell, OL coach Cable Per Rapoport, the Seahawks are letting Richard pursue "another opportunity", although it's unclear what that opportunity is. Seattle finished no worse than fourth in rushing from 2012 to 2015 but has been 23rd and 25th in the past two seasons.

Harvey Weinstein Punched in the Face in Arizona Restaurant Harvey Weinstein Punched in the Face in Arizona Restaurant According to TMZ , a man approached Weinstein and asked to take a photo with him after expressing that he enjoyed his movies. Back in October, TMZ reported that Weinstein flew from Los Angeles to Arizona for treatment in an inpatient program.

Three in Five First-Time Smokers Become Daily Smokers, Says Study Three in Five First-Time Smokers Become Daily Smokers, Says Study Data were analysed to calculate the conversion rate from ever trying a cigarette to ever smoking daily. In 2010 nearly 20% of people smoke in the United Kingdom , and in 2017 that number shrunk to 19.3%.

NHL All-Star roster heavy on hometown Lightning NHL All-Star roster heavy on hometown Lightning Tampa Bay's ice time leader (25:57/game) is now a league-best +24 and ranks 3rd amongst NHL defenseman in points. Overall, Schenn has tallied 291 points (126 goals, 165 assists) in 478 career regular season games.

Trump Denies Collusion But Doesn't Commit to Mueller Interview Trump Denies Collusion But Doesn't Commit to Mueller Interview In case you weren't counting - and I was - Trump uses the exact phrase " no collusion " seven times in that answer. The Department of Justice, headed by Attorney General Jeff Sessions, reopened the investigation on January 4.

Trump slams 'Sneaky Dianne Feinstein' for releasing Fusion founder's testimony Trump slams 'Sneaky Dianne Feinstein' for releasing Fusion founder's testimony Fusion GPS hired former British spy Christopher Steele to produce the report, of which the main claims have been unverified. But Billionaire activist Tom Steyer , long rumored to be pondering a bid, will not get in the race - according to the L.A.

LG announces 65-inch OLED TV that rolls up like paper LG announces 65-inch OLED TV that rolls up like paper It will have 731 percent more colour points than its predecessor, along with high frame support and Dolby Atmos Sound. The Consumer Electronics Show kicks off at the end of this week and we will come again with the last CES news for you.