Category: Treasuries

China Sells U.S. Treasuries to Support Yuan


China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.

Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.

The People’s Bank of China has been offloading dollars and buying yuan to support the exchange rate, a policy that’s contributed to a $315 billion drop in its foreign-exchange reserves over the last 12 months. The $3.65 trillion stockpile will fall by some $40 billion a month in the remainder of 2015 because of the intervention, according to the median estimate in a Bloomberg survey.

http://www.bloomberg.com/news/articles/2015-08-27/china-said-to-sell-treasuries-as-dollars-needed-for-yuan-support

CHINA SELLS U.S. TREASURIES TO SUPPORT YUAN


yuan1 Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.

The People’s Bank of China has been offloading dollars and buying yuan to support the exchange rate, a policy that’s contributed to a $315 billion drop in its foreign-exchange reserves over the last 12 months. The $3.65 trillion stockpile will fall by some $40 billion a month in the remainder of 2015 because of the intervention, according to the median estimate in a Bloomberg survey.

China selling Treasuries is “not a surprise, but possibly something which people haven’t fully priced in,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP. “It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind.”

http://www.infowars.com/china-sells-u-s-treasuries-to-support-yuan/

CHINA CONFIRMS IT HAS BEGUN LIQUIDATING TREASURIES, WARNS WASHINGTON


022814yuan2 But even as the cat was out of the bag for Zero Hedge readers and even as, to mix colorful escape metaphors, the genie has been out of the bottle since mid-August for China which, thanks to a steadfast refusal to just float the yuan and be done with it, will have to continue selling USTs by the hundreds of billions, the world at large was slow to wake up to what China’s FX interventions actually implied until Wednesday when two things happened: i) Bloomberg, citing fixed income desks in New York, noted “substantial selling pressure” in long-term USTs emanating from somebody in the “Far East”, and ii) Bill Gross asked, in a tweet, if China was selling Treasurys.

http://www.infowars.com/china-confirms-it-has-begun-liquidating-treasuries-warns-washington/

Treasuries Set for Best Week Since March as Stock Markets Tumble


U.S. Treasuries are poised for their biggest weekly gain in five months as demand for fixed income soared amid a global selloff in equities and concern that inflation will slow.
Ten-year notes also drew support from signs the Federal Reserve will keep interest rates close to zero for longer, and from a decline in oil prices that helped push a gauge of inflation expectations toward its lowest since 2010. Government debt from Australia to Britain also gained this week, driving the average yield on developed-nation bonds to a three-month low.
“It’s money wanting to be put in dollars and Treasuries,” said Charles Comiskey, head of Treasury trading in New York at Bank of Nova Scotia, one of 22 primary dealers that trade with the Fed. “Until the Fed pulls the trigger, the market will have a hard time believing they will raise rates.”

http://www.bloomberg.com/news/articles/2015-08-21/bonds-rally-across-globe-during-week-as-fed-liftoff-seen-delayed