China is fueling US bond rout by cutting holdings to a 14-year low as tensions between Washington and Beijing persist.

The US Treasury building in Washington, D.C., US on April 12, 2023.

US Treasury building.Jalal Gunes / Anadolu Agency

  • China reduced its holdings of US Treasury bonds to a 14-year low in June.

  • Bond prices fell in 2023 as investors worried about the Federal Reserve raising interest rates.

  • Tensions between Washington and Beijing also remain high.

China cut its holdings of Treasurys to a 14-year low in June, as tensions persist between Washington and Beijing and US adversaries try to undermine dollarsovereignty.

The world’s second-largest economy has reduced its exposure to US government debt to $103 billion, or 11%, according to… Treasury data Posted Tuesday.

It is the third month in a row that Beijing has sold off Treasurys, bringing its total holdings to the lowest level since May 2009, according to South China Morning Post.

Bond prices fell in 2023, with Two years returns Jumping 169 basis points and returns on 10 year bonds It rose 127 points as investors worried about the long-term impact of aggressive rate hikes by the Federal Reserve and government issuance of new debt.

China seems to be feeding defeat with The authorities are engaged in a geopolitical battle with the United States and engage in it Take off the dollara concerted effort to shed the dominant role of liability in international trade.

It is likely to continue to reduce its holdings of US debt over the next few months, according to experts.

“The ratio of US debt to China’s foreign exchange reserves is expected to continue to decline,” Tang Yao, an economics professor at Peking University, told the state-run newspaper. China Daily Wednesday.

Japan also reduced its exposure to Treasurys in June, according to data on Tuesday, while the United Kingdom and Belgium each increased their spending on US government bonds by more than $50 billion.

Read the original article at Business interested

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