China cuts US Treasury holdings by the most ever
China cut its holdings of US Treasury notes and bonds by the most ever, raising speculation a plunge in US yields has made government securities unattractive.
The nation’s holdings of long-term Treasuries fell in June for the first time in 15 months, dropping by $US21.2 billion to $US839.7 billion ($940 billion), a US government report showed yesterday. Two-year yields headed for a fifth monthly decline in August, falling today to a record 0.48 per cent.
« Buying now is a big risk, » said Hiroki Shimazu, an economist in Tokyo at Nikko Cordial Securities, a unit of Japan’s third-largest publicly traded bank. « I don’t recommend it. »
Investors who purchased two-year notes today would lose 0.4 per cent if the yield projection is correct, according to data compiled by Bloomberg.