Is China halting US Treasury purchases?

Is China halting US Treasury purchases?

Is China halting US Treasury purchases?

After a choppy day of trade, the Dow Jones, S&P 500 and Nasdaq ended each of their sessions day 0.1 per cent lower.

"China has been diversifying its forex reserves investments and its investments in US Treasuries is market-driven", SAFE said on its website.

For his part, Jeffrey Gundlach, known on Wall Street as the "Bond King", said on an investor webcast on Tuesday that if the 10-year Treasury yield pushes above 2.63 percent, it will accelerate higher.

That marked a turnaround after China burnt through almost US$320 billion in 2016 to defend the yuan, which fell 6.5 percent against the surging dollar.

Gross cited three reasons for his bearish bond call: Rising nominal U.S. GDP that will stoke inflation, reduced purchases from global central banks, and higher budget deficits in the U.S. The last time yields traded higher than that was in mid-2014.

Investors are eagerly trying to glean information about the tightening of monetary policy across the advanced economies, as central bankers consider how to slow or stop the purchases of government bonds, known as quantitative easing, which have sustained the bond markets in the aftermath of the financial crisis. "A significant change in policy could put considerable upside pressure on USA yields".

St. Louis Fed bank President James Bullard and head of the New York Fed Bill Dudley are among central bankers scheduled to speak. "We have supply coming up this week as well", he said, in a note.

More news: Chelsea eyeing shock move for West Ham forward Carroll

The Stoxx Europe 600 Index sank 0.3% as of 8:24am London time, the first retreat in more than a week and the largest decrease in three weeks. There's a "buy the dip" mentality, meaning even if the market falls 2%, buyers might come in because they've been rewarded for it in the past. The greenback also lost ground against a basket of major currencies. The euro was at $1.1939, up from $1.1935, and at ¥133.46-47, down from ¥133.61.

The Institute for Supply Management's nonmanufacturing index fell 1.5 points to 55.9% ( in December, signaling a slowdown in the pace of expansion for services-sector activity.

The treasury yields (return on investment) rise when bond prices fall, and so when the markets took a tumble on Wednesday, the yields moved to their highest level since March 15 a year ago, marking a 2.597 per cent return.

Germany's 10-year yield climbed eight basis points to 0.55%, the highest in more than five months on the largest surge in about six months. That left it 1.6 percent higher against the dollar for the week.

KEEPING SCORE: Britain's FTSE 100 rose 0.2 percent to 7,761 and France's CAC 40 was up 0.1 percent at 5,507.

Weak inflation at the producer level could add to concerns that the factors restraining inflation could become more persistent and result in the Federal Reserve being more cautious about raising interest rates this year. Contributions of 200 words or more will be considered for publication.

Related news