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  • China may dump U.S. Treasuries as Sino-U.S. tensions flare: Global Times

    From reuters.com

    China may gradually cut its holdings of U.S. Treasury bonds and notes, in light of rising tensions between Beijing and Washington, state-backed newspaper Global Times cited experts as saying. With Sino-U.S. relations deteriorating over various issues including coronavirus, trade and technology, global financial markets are increasingly worried if China would sell the U.S. government debt it holds as a weapon to counter rising U.S. pressure. “China will gradually decrease its holdings of U.S. debt to about $800 billion under normal circumstances,” Xi Junyang, a professor at the Shanghai University of Finance and ... (full story)

This would be great, Japan, the UK, the Saudi's, Singapore, Switzerland would just buy it up. Meanwhile, China is pissing off every single country in its vicinity, be it by sea or land. The holding of debt gives too much security to the big exporters.
The best strategy is a profitable one.
how would this effect eurusd
Quoting AnRan
This would be great, Japan, the UK, the Saudi's, Singapore, Switzerland would just buy it up. Meanwhile, China is pissing off every single country in its vicinity, be it by sea or land. The holding of debt gives too much security to the big exporters.
Why Japan, the UK, the Saudi's, Singapore, Switzerland didn't buy up the U.S. Treasuries to begin with? Why was China first in line?
Quoting AnRan
This would be great, Japan, the UK, the Saudi's, Singapore, Switzerland would just buy it up. Meanwhile, China is pissing off every single country in its vicinity, be it by sea or land. The holding of debt gives too much security to the big exporters.
Why the following countries will never buy us debt.

Japan - broke and bankrupt economy since late 80s and never recovered from it despite countless pm promising tarts and flowers all these years.

Saudis - they prefer stability over chaos

Singapore - they rather stay neutral than to antagonise US or China - whoever wins in the end.

UK - this must be the greatest joke of all, you don't expect our clown pm to buy popcorn from a clown potus do you?

As global market moves, usa is being phase out and eroded from the global world. This is a fact that "those make america great again" folks will never believe in, likewise our Great Britain is more Little Britain than anything else.

So will you buy the debt - if yes, good luck!
China will be the sore loser selling US treasuries when the dollar is so weak.
no body gona buy it so how china can sell tresries
4xbook Return This Year: 139.8%
Quoting bel3ouchi
no body gona buy it so how china can sell tresries
That is like saying US bonds are worthless. Then who is going to buy the new bonds that US needs to issue if the old ones are worthless? What would make the new bonds worth anything?
If this is real than gold would reach 5000 and DXY would be less than 50 total distruction for USD and that what would happen I think
This global Ponzi scheme will have to end someday, with or without China.
Debt on debt, again the same ... how can this explain common sense?
professor to student, pupil, me, you?
Quoting NotBoris
{quote} Why the following countries will never buy us debt. Japan - broke and bankrupt economy since late 80s and never recovered from it despite countless pm promising tarts and flowers all these years. Saudis - they prefer stability over chaos Singapore - they rather stay neutral than to antagonise US or China - whoever wins in the end. UK - this must be the greatest joke of all, you don't expect our clown pm to buy popcorn from a clown potus do you? As global market moves, usa is being phase out and eroded from the global world. This is a fact...
Haha. They already do buy the debt. You didn't really think it's just China and japan? Also, GBP, CAD, SGD, SEK, CHF, they are part of the DXY. They have direct risk. No one wants their currency sky rocketing against the dollar while America is still #1 consumer society.

You sounded so confident, poor fello. Did you even know the UK buys up US debt? Lol
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The best strategy is a profitable one.
Quoting OutThere
{quote} Why Japan, the UK, the Saudi's, Singapore, Switzerland didn't buy up the U.S. Treasuries to begin with? Why was China first in line?
It's about helping to control exchange rates. A country like China, if it sold off debt and started unwinding dollars, it would be in big trouble. They talk tough (i lived in China doing finance for 7 years), but the Chinese yuan is still tied to the dollar. Now to explain how it works.

Selling Treasuries and buying foreign bonds requires a series of transactions: first selling Treasuries for cash, then selling dollars for another currency, and then buying another country's bonds. The first transaction in the only one the U.S. needs to worry about. Selling dollars for say the euro would drive the dollar down and the euro up, which would help, not hurt, the U.S. economy. Massive inflows into the euro area though might be a problem for the ECB, because the last thing they want is the euro up at 1.7 or 2.0 EURUSD price.

Just another reason they would buy up the cash and debt. Citizens often view a strong currency as national pride but it's really bad for exporting. That's why Trump wants dollar down. America is mostly consumer based society, so all the overseas exporters do not want a weak dollar, but Americans should. And China definitely does not.

Even CNN, which HATES Trump, wrote an article how it would backfire on China. It's just a scare tactic or state run media trying to sound tough.
The best strategy is a profitable one.
Quoting Breza
This global Ponzi scheme will have to end someday, with or without China. Debt on debt, again the same ... how can this explain common sense? professor to student, pupil, me, you?
The way debt works is a % of GDP and inflation goals. Whats really happening with debt is they are borrowing against future inflationary growth. That's why it's like stealing from the next generation. America is now finally past 100% GDP to debt ratio. But it's still not THAT bad. Just not moral.

China, last i checked was 450% GDP to debt ratio and borrowing 5% of GDP monthly to sustain during the trade war, which is crazy. It's unsustainable. My firm, like many firms had to make the choice to leave the mainland and go to Hong kong. And that's why the push to control HK earlier than 50 years. They need HKs influx of capital to stabilize this debt problem.
The best strategy is a profitable one.
Two big countries with huge economies. It’s not good for anyone when two big dogs fight. Let’s hope both countries can work out their differences in the future.
Quoting AnRan
{quote} The way debt works is a % of GDP and inflation goals. Whats really happening with debt is they are borrowing against future inflationary growth. That's why it's like stealing from the next generation. America is now finally past 100% GDP to debt ratio. But it's still not THAT bad. Just not moral. China, last i checked was 450% GDP to debt ratio and borrowing 5% of GDP monthly to sustain during the trade war, which is crazy. It's unsustainable...
it is a government debt, but we should not forget the debt of corporations and households.

Either way, 100 or 400%, debt has only one constant, growth.
Where is the limit?
Quoting Breza
{quote} it is a government debt, but we should not forget the debt of corporations and households. Either way, 100 or 400%, debt has only one constant, growth. Where is the limit?
The limit is actually still pretty far off. Like I said, US debt only just went over 100% of GDP. Where does it end? Well, if the debt keeps rising, outpacing inflation like we've seen with these bailouts, it'll lead to problems. But really just start talking when it's 200% of GDP. I believe in a balanced budget amendment, but that's getting off topic from China unloading it's debt.

China unloading it's debt really isn't a threat to the US and a bigger threat to China. Most people just don't know or understand that. If you're wondering, than why ever buy it? Trump has changed the game. It's as simple as that.
The best strategy is a profitable one.
Quoting AnRan
{quote} The limit is actually still pretty far off. Like I said, US debt only just went over 100% of GDP. Where does it end? Well, if the debt keeps rising, outpacing inflation like we've seen with these bailouts, it'll lead to problems. But really just start talking when it's 200% of GDP. I believe in a balanced budget amendment, but that's getting off topic from China unloading it's debt. China unloading it's debt really isn't a threat to the US and a bigger threat to China. Most people just don't know or understand that. If you're wondering,...
I was thinking of debt in general, no matter the US or China.
Government debt +

2020 Q1 Household debt Country% of GDP
1 South Korea 97.9%
2 United Kingdom 84.4%
3 Hong Kong 82.5%
4 United States 75.6%
Thailand 70.2%
6 Malaysia 68.3%
7 China 58.8%
8 Japan 57.2%
9 Singapore 52.4%
10 Lebanon 50.7%

Corporate debt 2018. :
Spain 92.97
Sri Lanka 43.77
Sweden 130.65
Switzerland 118.10
Tajikistan 4.06
Thailand 47.70
Turkey 69.13
Ukraine 60.49
United Arab Emirates 79.87
United Kingdom 83.70
United States 74.45
Quoting Breza
{quote} I was thinking of debt in general, no matter the US or China. Government debt + 2020 Q1 Household debt Country% of GDP 1 South Korea 97.9% 2 United Kingdom 84.4% 3 Hong Kong 82.5% 4 United States 75.6% Thailand 70.2% 6 Malaysia 68.3% 7 China 58.8% 8 Japan 57.2% 9 Singapore 52.4% 10 Lebanon 50.7% Corporate debt 2018. : Spain 92.97 Sri Lanka 43.77 Sweden 130.65 Switzerland 118.10 Tajikistan 4.06 Thailand 47.70 Turkey 69.13 Ukraine 60.49 United Arab Emirates 79.87 United Kingdom 83.70 United States 74.45
yeah, but it doesn't make that big a difference. But it does for countries like China. You're focused on this government, corporate, personal, but is it really any different? Governments keep printing, under-writing corporate debt. When the market crashes cause no one could pay their mortgages, just bail out companies, banks, etc. They should just split up the companies and sell them off.

What matters with debt, is like I said before, it can not outpace growth (they calculate it 75 years out, its disgusting). Stimulus packages make it grow at a rate that it outpaces growth (underwriting corporate growth and debt, its called debt security). China has 5% annual growth but its borrowing 5% monthly so the economy doesn't feel the hit of the trade war. That is a HUGE deal. Mid 2018 it was at 200%, earlier this year it went over 300%. Jack Ma said its sad that he sees his friends who are making 30k, 40k RMB per month (5 to 7.5k USD/month) and still can't afford to buy a house (major cities like Shanghai are worse). Imagine the US national debt, or any countries national debt increase 100% every 16 months? Imagine next year US debt is 40 trillion from the 25 trillion now?

The conversation can keep spiraling to world countries, how 1st world or emerging economies all play a role in debt as well. But to stay true to the article. If China sells the debt, it would make its current export problem even worse. And with their current level of debt severely outpacing inflation for 2 or 3 years now, it would sooner crash their own economy.

I just looked up an article about the US keeping its current spending rate, so like 5 trillion a year with the stimulus. It wouldn't become an issue until the 2030's. So to answer your other question, thats your ceiling if they kept spending this much every year.
The best strategy is a profitable one.
Quoting AnRan
{quote} China, last i checked was 450% GDP to debt ratio and borrowing 5% of GDP monthly to sustain during the trade war, which is crazy. It's unsustainable.
Where do you get this 'China' data?
Quoting ladder
{quote} Where do you get this 'China' data?

https://tradingeconomics.com/china/g...nt-debt-to-gdp
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The key to sustainability of debt is ability to pay.
Interesting source of China v US debt structure and stats here:
https://www.nationmaster.com/country-info/compare/China/United-States/Economy/Debt

When we include total U.S. debt including all forms of government, state, local, financial and entitlement liabilities comes close to 2,000% of GDP, (source AB Bernstein 2019) which is really scary.
Worrying about China would seem low on the list of priorities in tackling this figure.
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Quoting OutThere
{quote} That is like saying US bonds are worthless. Then who is going to buy the new bonds that US needs to issue if the old ones are worthless? What would make the new bonds worth anything?
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The same folk who already own the current debt except perhaps the Chinese??
And yeah thats right... thats 70% Americans.
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Quoting RossEdwards
{quote} {image} The same folk who already own the current debt except perhaps the Chinese?{image}
So, the idea is to find which countries still have a large enough risk appetite to absorb the vacancy that China would leave if they decide to gradually or abruptly unload their portion of the debt. I'd think Japan is probably out of contention seeng their own debt/GDP levels and the amount of US debt they are already carrying.

https://www.visualcapitalist.com/for...most-u-s-debt/

"China has accumulated Treasury securities over decades, as part of its strategy to keep its domestic currency from strengthening. Interestingly, the export-heavy nation has reduced its swath of Treasurys in recent months, selling off close to $200 billion of them."
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I found the coments on this article much more informative, enlightning (and frightning) than the article itself. Thankyou to ALL who posted.
The elites think we are stupid. They are in the main quite correct.
Quoting ladder
{quote} Where do you get this 'China' data?
That was a typo, it was 350% as a later post I even wrote 200 to over 300. But they'll be over 400% next year, easily. Unless they take over HK faster.
The best strategy is a profitable one.
Quoting OutThere
{quote} So, the idea is to find which countries still have a large enough risk appetite to absorb the vacancy that China would leave if they decide to gradually or abruptly unload their portion of the debt. I'd think Japan is probably out of contention seeng their own debt/GDP levels and the amount of US debt they are already carrying. https://www.visualcapitalist.com/for...most-u-s-debt/ "China has accumulated Treasury securities over decades, as part of its strategy to keep its domestic currency from strengthening....
Honestly, thats a really cool glove or sapphire type of image. But when it comes to picking up debt that China would dump, it would be more of a necessity than a "want". Just look at Brexit and what has happened with EURGBP, and what its done to British exports. Imagine this but on a much bigger scale. The most crude example I can think of is Canadian milk. US imports a lot of milk from Canada, the price of a gallon of milk would go from 3.50$ to 20$ a gallon if it was imported, while American domestic milk would still be at 3.50$. No one would buy canadian farmers milk. Now imagine that for european cheeses, wines, Korean phones, Japanese washing machines. But then those in europe or japan that buy American seafood like Shrimp and Lobster from Maryland, it would become dirt cheap for them to buy it. So America would get a HUGE advantage as an exporter. The world would want to buy up that debt immediately to ensure the their own currencies don't get so strong and destroy their export sector.

As many know, the DXY is just a a basket of currencies. The countries that are part of that basket would face the biggest risk if China unloaded its debt. How could these countries not come together to split up that 1 trillion. The world would fix it, then China would lose its ability to manipulate the USD/CNH exchange rate.
Euro (EUR), 57.6% weight
Japanese yen (JPY) 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight
Swiss franc (CHF) 3.6% weight
The best strategy is a profitable one.
Quoting RossEdwards
The key to sustainability of debt is ability to pay. Interesting source of China v US debt structure and stats here: https://www.nationmaster.com/country-info/compare/China/United-States/Economy/Debt When we include total U.S. debt including all forms of government, state, local, financial and entitlement liabilities comes close to 2,000% of GDP, (source AB Bernstein 2019) which is really scary. Worrying about China would seem low on the list of priorities in tackling this figure.
Yeah, you looked at those stats totally wrong. What does 5x the number of ATM's have to do with US debt? Also, 2000% the amount? there isn't even that much capital in the world, haha. How did you not think that one through first?

In 2018 Chinese yuan became a reserve currency. The IMF now has a lot more information about chinese debt than we ever did before. Their debt alone exceeds 15% of the global debt. The country is getting record low growth, record high debt, and a trade war.
https://www.bloomberg.com/news/newsletters/2019-11-30/next-china-the-ticking-debt-bomb#:~:text=SHARE%20THIS%20ARTICLE&text=One%20of%20those%20is%20debt,2018%20to%20roughly%20%2435%20trillion.
It's no longer a question of "will" or "if" the bubble burst. It's when will their bubble burst. And they going to sell off US debt? haha, yeah, thats not happening.

And I don't think its a surprise to Americans that America owns most of its debt. This has come up time and time again. The only reason the US social security fund is becoming insolvent is because congress keeps borrowing against it. No secret there.
The best strategy is a profitable one.
Quoting AnRan
{quote} Haha. They already do buy the debt. You didn't really think it's just China and japan? Also, GBP, CAD, SGD, SEK, CHF, they are part of the DXY. They have direct risk. No one wants their currency sky rocketing against the dollar while America is still #1 consumer society. You sounded so confident, poor fello. Did you even know the UK buys up US debt? Lol {image}{image}
Yawn yawn.....

We do know who and which countries holds us debt over the years, but that is different to your OP of WHO WILL BUY from now. There is a stark difference matey!

Nevertheless, one doesn't need to have a PhD to see dollar values is going down the drain if it holds on to its current government - making america great again n again n again n again n ^N..............

I really sympathise those who rather not see the truth and reality but bites on anyone that show them the reality and truth. Guess the old saying is right - "Reality bites"
Quoting NotBoris
{quote} Yawn yawn..... We do know who and which countries holds us debt over the years, but that is different to your OP of WHO WILL BUY from now. There is a stark difference matey! Nevertheless, one doesn't need to have a PhD to see dollar values is going down the drain if it holds on to its current government - making america great again n again n again n again n ^N.............. I really sympathise those who rather not see the truth and reality but bites on anyone that show them the reality and truth. Guess the old saying is right - "Reality...
Your response is something I expected from a fan of the labor party. And I hold true to what I said. The Uk would 100% be one of the countries that bought a portion of the debt. They would need to to protect their own economy.

The reality is your dislike of Trump, or even America in general blinds you to this fact. Your original post said those countries would never buy debt. You obviously didn't even know your own country buys the debt and is like 12% of the dollar index, haha. If I were British, you make me want to be a Tory.
The best strategy is a profitable one.
Quoting AnRan
{quote} Your response is something I expected from a fan of the labor party. And I hold true to what I said. The Uk would 100% be one of the countries that bought a portion of the debt. They would need to to protect their own economy. The reality is your dislike of Trump, or even America in general blinds you to this fact. Your original post said those countries would never buy debt. You obviously didn't even know your own country buys the debt and is like 12% of the dollar index, haha. If I were British, you make me want to be a Tory.


Please your OP again - WHO BUYS not WHO BOUGHT - there is a BIG difference matey.

Ain't bother to create a rift or argument, never my intention.

My dislike of Trump is how not who he is but how he treat the rest like imbeciles. Never have I said I do not like americans - I have American friends whom I love.

Just like I love Danish but I hate Danish pastries, not sure what your problem is. As a matter of fact it is you that is the PROBLEM HERE.

Have a good trading day - am still riding from the downside trading of GBP. O, where is that "PLUTONIUM member" who rebuked me for talking monkeys when buying from 1.25 on 18th June 2020? I wonder
Quoting RossEdwards
The key to sustainability of debt is ability to pay.
this is the true and simplest explanation,
but then why is new money being printed, there seems to be no ability to pay?
Quoting NotBoris
{quote} , not sure what your problem is. As a matter of fact it is you that is the PROBLEM HERE. Have a good trading day - ...
Im inclined to agree...
30%+ of post on this thread??
New member? - Bad sign.
Warning: A Dangerous Subversive: 1% of comments CoCed
Quoting Breza
{quote} this is the true and simplest explanation, but then why is new money being printed, there seems to be no ability to pay?
You're right. There is no ability to pay it. The idea is that whole the number is huge, but it's value is less over time. Like 100 dollars today isn't the same as 100 dollars 50 years ago. Just on a much larger scale.


Quoting RossEdwards
{quote} Im inclined to agree... 30%+ of post on this thread?? New member? - Bad sign.
Yeah, I posted cause I work directly with China. So it was something that directly affects me. And? New member doesn't mean new to finance or trading. The problem isn't me when most economist would say the same thing as me. Just can't fix stupid on these forums.

Quoting NotBoris
{quote} Please your OP again - WHO BUYS not WHO BOUGHT - there is a BIG difference.
And that's true, too. But I also think there is a big difference between WANTING to buy the debt, and NEEDING to buy the debt. We'll just see how it turns out if someone actually dumps the debt one day.
The best strategy is a profitable one.
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  • Posted: Sep 4, 2020 11:21pm
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    Category: Fundamental Analysis
    Comments: 32  /  Views: 10,323