It took China just 11 hours to retaliate against the United States for proposing tariffs on some 1,300 Chinese products, but Chinese officials are holding back on taking aim at their largest American import: government debt.
Graphic: Top U.S. trade partners & foreign holders of Treasuries - reut.
Jeffrey Gundlach, the chief executive of DoubleLine Capital LP, said China can use its Treasury holdings as leverage, but only if they keep holding them.
Prices on benchmark 10-year U.S. Treasury notes slipped on Wednesday, giving back earlier gains on the trade news.
China's Treasury holdings have dipped in recent months, declining by about $30 billion from $1.20 trillion last August, and they are down about 11 percent from their record high above $1.3 trillion in late 2013, according to U.S government data.
Even if the likelihood of a change in Chinese policy regarding its Treasuries portfolio remains low, investors are sensitive to the risk any big shift would pose to world financial markets, where Treasuries are a global benchmark asset.
A January report that China might halt its purchases of Treasuries forced yields higher, but China disputed the news and said it was only diversifying its foreign exchange reserves to safeguard their value.
https://www.reuters.com/article/us-usa-trade-china-treasuries/china-holding-treasuries-keeps-nuclear-option-in-u-s-trade-war-idUSKCN1HB34M
Graphic: Top U.S. trade partners & foreign holders of Treasuries - reut.
Jeffrey Gundlach, the chief executive of DoubleLine Capital LP, said China can use its Treasury holdings as leverage, but only if they keep holding them.
Prices on benchmark 10-year U.S. Treasury notes slipped on Wednesday, giving back earlier gains on the trade news.
China's Treasury holdings have dipped in recent months, declining by about $30 billion from $1.20 trillion last August, and they are down about 11 percent from their record high above $1.3 trillion in late 2013, according to U.S government data.
Even if the likelihood of a change in Chinese policy regarding its Treasuries portfolio remains low, investors are sensitive to the risk any big shift would pose to world financial markets, where Treasuries are a global benchmark asset.
A January report that China might halt its purchases of Treasuries forced yields higher, but China disputed the news and said it was only diversifying its foreign exchange reserves to safeguard their value.
https://www.reuters.com/article/us-usa-trade-china-treasuries/china-holding-treasuries-keeps-nuclear-option-in-u-s-trade-war-idUSKCN1HB34M
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