China and Japan jointly sold US treasury bonds

China remains the largest foreign creditor of the US government, despite the net sale of US Treasury bonds in April ...     China seems no...

China remains the largest foreign creditor of the US government, despite the net sale of US Treasury bonds in April ...
 
 China seems not to use US treasury bonds as a trading tool - Photo: VOA.
China remains the largest foreign creditor of the US government, despite a net sell of US Treasuries in April. The move is not seen as a sign that Beijing is targeting US bonds in retaliation. Washington trade, Bloomberg reported.
US Treasury bonds, Treasuries and Treasury bills fell $ 5.8 billion in April to $ 1.18 trillion, according to data from the US Treasury Department.
Japan, China's second largest foreign lender, net sold $ 12.3 billion of US Treasuries in April, also holding $ 1.03 trillion - the lowest since 2011.
Overall, total US Treasuries fell in April to $ 6.17 trillion.
In March, global investors worried Beijing would cut its US treasury bond purchase, or even sell it, in retaliation for Washington's imposition of a tariff barrier. However, up to now, there have been no signs that China wants to upset the global financial market this way.
Instead, China responds to the administration of President Donald Trump imposing a $ 50 billion tax on Chinese goods by imposing duties on similar amounts of US goods.

 
 US Treasuries (white lines) and Japan (blue lines) over the years. Unit: USD billion - Source: US Treasury / Bloomberg.
"So far, we have not seen evidence of China using US treasury bonds as a tool in trade talks," said Zach Pandl, head of global foreign exchange strategy at Goldman Sachs. , identify. "China keeps buying US Treasuries regularly in the context of rising reserves, which is still true."
An important reason for Japan to reduce its holdings of US Treasury bonds is the cost of hedging the exchange rate. Japanese investors buy US Treasuries often buy swaps to prevent exchange rate fluctuations.
This hedge made the yield on US Treasury bonds ten-year yields of only 0.38 percent per year, compared to the current yield of 2.92 percent on the bond if not used. protection.
In the past month, the yuan has fallen by about 1% against the dollar, in line with the overall downward trend of emerging-market currencies against the greenback.
In May, China's foreign exchange reserves fell for a second straight month, to $ 3.11 trillion, as the yuan's depreciation against the dollar affected the value of the dollar's reserves.

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High Tech Brain: China and Japan jointly sold US treasury bonds
China and Japan jointly sold US treasury bonds
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