Poll - The Stock Market and Vintage Sales

[griffon512]

"China is the second largest holder of US treasuries (Japan first, UK third). Piss off China enough and this could escalate to a financial war and if China stops buying our obligations rates will rise and the cost of financing our 1.1 trillion dollar deficit will grow."


China's holdings of US treasuries have declined from $1.3 billion in 2013 to ~$750 billion at the end of the last year. I'm guessing they have been a heavy seller of US treasuries in the last week, which likely contributed to the spike in bond yields over that period. Bond yields spiking is one of the reasons why there is a 90-day delay in the announced tariff policy (with the exception of China). With $36+ trillion in national debt, $2 trillion in structural annual deficits -- including $1 trillion in annual debt interest costs (higher than we spend on national defense) -- it becomes even more expensive to be a debtor when yields increase. Expect the government to do everything in its power to avoid a further spike in yields, including aggressively buying US treasuries in the open market if any foreign nation is dumping a large amount.

[bk400]

Originally Posted by griffon512

"China is the second largest holder of US treasuries (Japan first, UK third). Piss off China enough and this could escalate to a financial war and if China stops buying our obligations rates will rise and the cost of financing our 1.1 trillion dollar deficit will grow."


China's holdings of US treasuries have declined from $1.3 billion in 2013 to ~$750 billion at the end of the last year. I'm guessing they have been a heavy seller of US treasuries in the last week, which likely contributed to the spike in bond yields over that period. Bond yields spiking is one of the reasons why there is a 90-day delay in the announced tariff policy (with the exception of China). With $36+ trillion in national debt, $2 trillion in structural annual deficits -- including $1 trillion in annual debt interest costs (higher than we spend on national defense) -- it becomes even more expensive to be a debtor when yields increase. Expect the government to do everything in its power to avoid a further spike in yields, including aggressively buying US treasuries in the open market if any foreign nation is dumping a large amount.

+1. The US has only been solvent because Treasuries have been a safe haven and, by extension, the US dollar has been the world's reserve currency. There is no amount of fiscal, budgetary or monetary policy that can rescue us financially if that armor is somehow pierced.