China Hints That It May Slow Or Stop Purchasing U.S. Treasuries

Bloomberg: China Weighs Slowing or Halting Purchases of U.S. Treasuries

* Officials have recommended slowing or halting purchases
* China is world’s biggest foreign holder of U.S. Treasuries

China added to bond investors’ jitters on Wednesday as traders braced for what they feared could be the end of a three-decade bull market.

Officials in Beijing reviewing the nation’s foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries, according to people familiar with the matter. Benchmark bonds reversed earlier gains on the news, with the yield on 10-year Treasuries climbing for a fifth day.

China holds the world’s largest foreign-exchange reserves, at $3.1 trillion, and regularly assesses its strategy for investing them. It isn’t clear whether the recommendations of the officials have been adopted. The market for U.S. government bonds is becoming less attractive relative to other assets, and trade tensions with the U.S. may provide a reason to slow or stop buying American debt, the thinking of these officials goes, according to the people, who asked not to be named as they aren’t allowed to discuss the matter publicly. China’s State Administration of Foreign Exchange didn’t immediately reply to a fax seeking comment on the matter.

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Update: China is reportedly thinking of halting US Treasury purchases and that's worrying markets right now (CNBC)

WNU Editor: Some are speculating that this is a pressure tactic from China on the U.S. over trade issues. I see it differently. There are better investments elsewhere with a better return, but there are also concerns in China on the slowing down of the economy, and the need to address the severe debt problems that some of China's provinces and large industries now find themselves in.