China Sells U.S. Treasuries to Support Yuan

[Recursion]

http://www.bloomberg.com/news/articles/2015-08-27/china-said-to-sell-treasuries-as-dollars-needed-for-yuan-support

China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.

Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.

The People’s Bank of China has been offloading dollars and buying yuan to support the exchange rate, a policy that’s contributed to a $315 billion drop in its foreign-exchange reserves over the last 12 months. The $3.65 trillion stockpile will fall by some $40 billion a month in the remainder of 2015 because of the intervention, according to the median estimate in a Bloomberg survey.

China selling Treasuries is “not a surprise, but possibly something which people haven’t fully priced in,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP. “It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind.”

WTF? They devalued like a week ago on purpose and now they're valuing up? What kind of bush league crap is that?

[snooper2]

1. nobody is going to respond to this since they don't understand

so, we will add a little song to get attention


plus, I'm on a roll

[Lucky Luciano]

2. China's premier is coming to the U.S. in mid September...

They can stay on our good side by not devaluing by 10%, but many people think they will drop to 6.75-7.00 after the visit (6.4 now).

Also, they are having a huge parade on September 3 to celebrate the 70th anniversary of ending WW II. They want spirits to be high for that, so they just started to prop up their stock market in a big way starting with the rate cuts then the outright aggressive buying of stocks into yesterday's close.

Let's see what happens towards the end of September into October.

[Hoppy]

3. They have been proping up shit. The problem is that people are beginning to recognize it's shit.

Prop up as much as they want, their market will hold for a while and then drop another 50%.

[PowerToThePeople]

4. I do not understand these policies well

Other than student loans, I have never used credit from the banking industry and never intend to.

Are they increasing their reserve currency? Do they feel our bonds are currently overvalued? Maybe we will default our debt and they do not want to be left holding the bag?

[leveymg]

5. When underlying bond rates rise, so do risks of portfolios

This will have major impacts on calculated valuations of options according to Black Scholes