Economy

Dollar bruised by worries over China's stance on United States bonds

Dollar bruised by worries over China's stance on United States bonds

US bond prices tumbled, boosting the benchmark 10-year Treasuries yield to a 10-month high of 2.597 per cent after Bloomberg reported that China, the biggest foreign holder of US Treasuries, could slow or stop buying government bonds.

In 2016, China's treasury holding tumbled US$187.7 billion when the country was briefly dethroned by Japan as the top holder of United States government debt, as China's central bank dipped into its reserve to defend the ailing yuan. The decision is based on the fact that other investments may offer better returns, but also on the mounting trade tensions between Beijing and Washington.

The dollar nursed its losses against the yen on Thursday, having suffered its biggest one-day drop in almost eight months following a report that China was ready to slow or halt its purchases of U.S. Treasuries.

The Bloomberg report said that trade tensions between the two countries could provide a reason for Beijing to slow down or halt the purchases.

In the end, China lifted its Treasuries holdings by $167 billion in 2009, or 23 percent, US data show.

Other experts dismiss the idea that China would use bonds to play politics.

The 10-year note yielded 2.56% at about 2 p.m.in NY, little changed on the session and down from as high as 2.595% earlier.

More news: Trump in 'excellent health,' White House doctor says after exam

Yet there are rising concerns that, with central banks moving towards tighter monetary policy, the good times are now coming to an end.

Trading after the China news shows investors didn't exactly storm the exits. "Consequently, some future selling of USA treasuries may be forthcoming by market participants, including from China, as well as elsewhere, because of inflation pressures", say Grace and Haddad.

If central bank reserves are to be truly diversified, or bare any resemblance to the shape of the global economy, then reserves managers have to keep pace with this trend.

The Canadian dollar nursed its losses, having slipped on Wednesday as worries of a U.S. NAFTA withdrawal tempered bets that the Bank of Canada will raise interest rates next week. "It's challenging to find any real substantial alternatives", with China earning dollars - the flip side of the USA current account deficit. That's just how markets work. The session high for the global benchmark was US$69.37, highest since May 2015.

In order for bond yields to move higher, bond prices would have to fall as the "coupon" interest payment is fixed at the point when new bonds are issued and can not be changed to compensate for higher (better) base rates.

USA inflation data for December are due on Friday morning, with traders closely watching for hints (http://www.marketwatch.com/story/why-us-inflation-data-will-be-a-litmus-test-for-bond-buyers-2018-01-09) that consumer prices are picking up at a faster pace that could speed up the Federal Reserve's expected rate increases.


  • Cold Start To Week, Snow Possible Mid-Week

    Temperatures moderate some, but some spots may still have trouble breaking the freezing mark, with highs near 30 to the mid-30s. Gusty winds remain through tomorrow and that will create feels-like temperatures in the teens tonight and 20s tomorrow .
    Iran rejects Trump's demand for changes to Obama-era nuclear deal

    Iran rejects Trump's demand for changes to Obama-era nuclear deal

    President Donald Trump to endorse a key nuclear agreement with Iran saying the deal is essential for worldwide security. He said remaining in the pact will give Congress more time to come up with bipartisan legislation regarding Iran.
    Chandigarh stalking case: Vikas Baral gets bail, Varnika still hopeful

    Chandigarh stalking case: Vikas Baral gets bail, Varnika still hopeful

    NEW DELHI: on Saturday rejected as a "blatant lie" a video released by accused wherein he proclaims his innocence. He alleged that he was made a target by some in an attempt to tarnish his father's political image.
  • Trump's slur on countries is 'racist'

    Trump's slur on countries is 'racist'

    In a tweet on Friday, Trump denied using the word "shithole", but Durbin insisted that the president had indeed said it. I will not be diverted from all possible efforts to continue negotiating to stop the deportations.
    Makar Sankranti special trains introduced by Indian Railways

    Makar Sankranti special trains introduced by Indian Railways

    And PM Narendra Modi extended his greetings to the people on the occasion of Makar Sakranti, Pongal, Magh Bihu and Uttarayan. People across the country celebrate this day as Makar Sankranti (beginning of the harvest season) or Pongal .

    Alexis Sanchez would be 'major signing' for Manchester United, says Andy Cole

    Questioned as to whether there was any truth in the rumour, the Arsenal manager was coy. "So it makes you work harder ", he said. UNITED have reportedly won the race to sign Arsenal ace Alexis Sanchez - according to unconfirmed reports.
  • Chipotle Mexican Grill Inc (NYSE:CMG) Sentiment Report

    Ratings analysis reveals 28% of Southwestern Energy Company's analysts are positive. (NYSE:CMG) rating on Monday, December 7. ValuEngine cut Chipotle Mexican Grill from a "hold" rating to a "sell" rating in a research report on Sunday, December 31st.
    Golden Globe Winner Aziz Ansari Accused Of Sexual Assault

    Golden Globe Winner Aziz Ansari Accused Of Sexual Assault

    I think that started a new fire, and it kind of made it more real [.] I believe that I was taken advantage of by Aziz. Watching Ansari up on the stage gave courage to the woman to talk about her encounter with the actor.
    2nd Test: SA 269/6 at stumps on Day 1

    2nd Test: SA 269/6 at stumps on Day 1

    The off-spinner changed to around the wicket, pushed a delivery straighter and had the opener edging a late cut. In between those two dismissals, Quinton de Kock was out first ball off spinner Ravichandran Ashwin .
  • These Maligned Countries Have a Message for President Trump

    These Maligned Countries Have a Message for President Trump

    I want a merit based system of immigration and people who will help take our country to the next level. Trump suggested the U.S. should instead focus its immigrant entry policy on countries such as Norway.
    What Does Judge's Decision Mean For DACA Recipients Now?

    What Does Judge's Decision Mean For DACA Recipients Now?

    So the White House was essentially - as Breitbart correctly pointed out - thumbing its nose at the idea of a bipartisan DACA deal. We must turn off the irresistible "jobs magnet" and ensure that immigration laws are effectively enforced within the U.S.
    Vetr Upgrades United Parcel Service (NYSE:UPS) to

    Vetr Upgrades United Parcel Service (NYSE:UPS) to "Hold"

    Since August 22, 2017, it had 0 insider buys, and 1 insider sale for $2.02 million activity. $601,283 worth of EOG Resources, Inc. The company was maintained on Monday, October 23 by Cowen & Co. (NYSE:UPS) on Wednesday, February 1 to "Market Perform" rating.