China starts to dump U.S. treasuries
Duncan Richardson, News Editor
28 Aug 2015, 10:09 a.m.
Its official China has started to reduce its U.S. treasury holdings to help support the Chinese Yuan. China sold the treasuries directly into the market, as well as through identities in Switzerland and Belgium. According to a source close to the matter the Chinese government communicated with the U.S. Treasury Department prior to the sales.
Data released from the U.S. treasury department indicates that China still owns $1.48 trillion in U.S. debt securities.
If sales continue yields on U.S. Treasuries will come under considerable upward pressure and put the Fed in a difficult situation. The U.S. government is swimming in an ocean of debt and cannot afford to pay a higher rate of interest.
If China continues to reduce their exposer to U.S. debt will the Federal Reserve be forced into QE4 in a desperate attempt to stop interest yields rising?