China FX regulator weighs in on U.S. bond-buying story

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China FX regulator weighs in on U.S. bond-buying story

Following the reports, United States treasury bonds surged while the dollar went lower and the price of gold appreciated.

Even if it does happen, some commentators doubt it will affect the demand for USA treasuries - "First, I don't think it's relevant, second, I don't think it's going to happen", one economist told CNBC.

Bond veteran Bill Gross says a bear market has begun, read about that here.

China's State Administration of Foreign Exchange said that a news report saying officials reviewing the country's foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries might have quoted a "wrong source". For China, trade tensions with the U.S. may also provide a reason to slow or stop buying American debt.

China's foreign exchange reserves, the world's largest, reached a total of $1.19 billion trillion in October 2017. It isn't clear whether the recommendations of the officials have been adopted.

Which geographic regions will impact U.S. Treasuries more in 2018, China, Middle East or Europe?

Any reduction in Chinese purchases would come just as the US prepares to boost its supply of debt.

In short, private investors were already going to need to soak up more supply going forward as the Fed steps away.

The people didn't specify why trade tensions would spur a cutback in Treasuries purchases, though foreign holdings of US securities have sometimes been a geopolitical football in the past. Data from China's central bank showed that China's foreign exchange reserves rose $3.14 trillion in December as tight regulations and a strong yuan continued to discourage capital outflows.

The worldwide media on Wednesday had said that China considered U.S. bonds non-lucrative and was thus looking to slow their purchases.

The dollar moved sharply lower on this morning's news and the euro jumped as it's easy to assume that adding EUR debt is likely to be the favored alternative when it comes to shifting the composition of the war chest.

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