Is China halting US Treasury purchases?

Bill Gross declares bond bear market as 10-year Treasury yield tops 2.55%

US indices end on a lower note

The Bloomberg News report had lifted yields on the 10-year government bond to a 10-month high on Wednesday. However, market participants suggested it would take time to verify any slowdown in Chinese purchases of U.S. Treasurys as new data emerges in the coming months. It said investments in Treasuries are decided by market conditions.

China owns nearly $1.2 trillion of US government debt, more than double the level from a decade ago, with most of the buildup coming as the nation boosted foreign-exchange reserves to help offset a strengthening yuan.

And while 2018 has brought some telegraphed risks into sharper focus, nothing has rocked the foundation of the $14.5 trillion Treasuries market, said Aaron Kohli, an interest-rate strategist at BMO Capital Markets in NY.

But others said short sellers were squeezed out by the sudden downshift in yields prompted them to buy back, or "covering", the securities they had borrowed, juicing the late day rally. However, we believe USA inflation pressures are picking up. "I don't think that's worked out so poorly for the U.S".

He added that a "politically induced" sell-off of Treasuries would threaten global economic growth, which would be bad news for China and its big export industry.

China has rejected a news report about its plans to slow or halt purchases of US Treasury bonds, saying it is either "fake news" or based on incorrect sources.

Wen's comments in March 2009 came weeks after Secretary of State Hillary Clinton had urged China to keep buying Treasuries while on a visit to Beijing.

China's holding of U.S. government debt - the world's largest, climbed US$131 billion in the first 10 months of 2017 to US$1.19 trillion, data from the Treasury Department showed.

"We don't see a material impact on the United States dollars, and our view is for further USD depreciation as the global economy picks up and "other" central banks look toward tightening their monetary policies", Grace and Haddad say.

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.

An official at a major Japanese bank said the dollar attracted buying on dips after a sharp fall this week.

China wants its own currency, the yuan, pegged to the dollar. On Wednesday, the yield was trading around the highest level since March previous year.

Its rise came amid a glut of bond supply from the U.S., the UK, Japan and Germany, and a surprise cut in purchases of long-dated Japanese government bonds by the Bank of Japan (BoJ).

Following the market's movement, bond veteran Gross, who is portfolio manager of the Janus Henderson Global Unconstrained Bond and Total Return strategies and a member of the global macro fixed income leadership team, took to Twitter on Tuesday to say "bond bear market confirmed".

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