China hold­ings of US Trea­suries rise in Feb

Ex­perts dis­cuss pos­si­ble re­duc­tion prompted by on­go­ing trade dis­pute

Global Times - - Biz Markets -

China’s hold­ings of US Trea­suries rose in Fe­bru­ary, as net new for­eign pur­chases in­creased to their largest since May 2017, data from the US Trea­sury Depart­ment showed.

Data showed China’s hold­ings rose to $1.177 tril­lion from $1.168 tril­lion in Jan­uary.

China re­mains the largest non-US holder of US Trea­suries.

Fe­bru­ary’s data also does not yet re­flect the on­go­ing trade ten­sion be­tween the US and China.

“That’s more of a slow-burn­ing story,” said Gen­nadiy Gold­berg, in­ter­est rates strate­gist at TD Se­cu­ri­ties in New York.

“It’s a bit too soon for any tar­iff talk to have an im­pact on China’s Trea­sury hold­ings,” said Gold­berg. “Sell­ing US Trea­suries would be a last re­sort for China.”

In re­sponse to mar­ket con­cerns that China could re­duce its Trea­suries hold­ings as a coun­ter­mea­sure against US tar­iff ac­tions on Chi­nese prod­ucts, Chi­nese Vice Fi­nance Min­is­ter Zhu Guangyao said ear­lier this month that China is a re­spon­si­ble in­vestor and re­spects in­ter­na­tional cap­i­tal mar­ket rules.

“China man­ages its for­eign ex­change re­serves via mar­ket op­er­a­tions in ac­cor­dance with mar­ket rules, spe­cific mar­ket prin­ci­ples and the prin­ci­ple of di­ver­si­fied in­vest­ment,” he said, cit­ing re­marks made by Chi­nese Premier Li Ke­qiang on forex re­serves man­age­ment in March.

China’s for­eign ex­change re­serves rose to $3.1428 tril­lion at the end of March, ac­cord­ing to data from the Peo­ple’s Bank of China, the coun­try’s cen­tral bank.

Over­all for­eign hold­ings of US gov­ern­ment bonds and notes rose to $6.291 tril­lion in Fe­bru­ary from $6.260 tril­lion the pre­vi­ous month. The in­crease came af­ter three straight months of de­clines.

That said, for­eign de­mand for Trea­suries slowed over­all in the sec­ond half of Fe­bru­ary, which in­cluded a near-record sales week, as the gov­ern­ment boosted is­suance to help fund US Pres­i­dent Don­ald Trump’s tax over­haul and a two-year bud­get deal, ac­cord­ing to Trea­sury data.

Japan, the sec­ond largest holder of US Trea­suries, cut its hold­ings by $6.3 bil­lion to $1.0595 tril­lion in Fe­bru­ary.

Bench­mark US 10-year yields hit a high of 2.957 per­cent, which was the high­est since Jan­uary 2014.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.