Although there is no news in the market that China will adopt this proposal, the rapid response of the market has been reflected in the market trend. In addition, as far as Sino-US relations are concerned, the increasingly tense trade relations between China and the United States provide sufficient reasons for China to slow down or stop buying American bonds. According to the data of the U.S. Treasury Department, China's foreign exchange reserves rank first in the world, about 3 trillion dollars, and it is the largest holder of U.S. Treasury bonds, holding 65,438+0.19 as of 2065,438+07. China's threat to "stop buying" American debt will be more lethal than the actual "stop buying" American debt.
In addition, sources familiar with the situation said that compared with other assets, the attractiveness of US Treasury bonds is decreasing. The source also said that the tense trade relationship with the United States is also the reason for slowing down the pace of US debt purchases. At the same time, China officials have not clearly pointed out why the tense trade relations will lead to the reduction in the purchase of US debt. Speaking to reporters in Brussels, David Malpass, the US Treasury's undersecretary for international affairs, dismissed China's concerns about US debt demand. "The US Treasury bond market is a deep and powerful market in the world, so we believe it will remain a deep and powerful market with the strengthening of our economy," Malpas said when asked how to comment on the above report. Malpas also reiterated that he was worried that China's emphasis on state-owned enterprises and government subsidies would lead to distorted capital allocation.
After the news that China may slow down or stop buying US Treasury bonds overnight came out, the yield of major government bonds continued its earlier upward trend. The yield of 10-year US bonds hit a monthly high of 10 of 2.59% during European trading hours. The dollar suffered a sell-off and fell to a six-week low against the yen. In addition, the major stock indexes of US stocks also reduced their earlier declines in the first time, as the yield of US bonds rose, pushing up other financial stocks such as bank stocks.