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China cut its US treasury debt to the lowest level for two years



Department of Treasury in Washington, D.C.

Adam Jeffery | CNBC

As trade tensions expand in the US, China sold Company treasuries at the fastest pace in about two years in March.

The largest foreign debt holder of the United States has cut the level by just $ 20.5 billion, a slight decrease that brought the total stock to $ 1.12 trillion. But the move represents a continuing pattern of denials coming from which both sides will not be able to hammer a long-term trade agreement and instead focus on a tit-for-tat tariff battle that strengthens the recent days. [1

9659002] In the 12-month end of March, the latest month in which data is available, China's US government bonds, bonds and bills fell to $ 67.2 billion, a 5.6% decline . The total has fallen by about $ 200 billion from 2012 to today and now represents 7% of US total debt remaining, compared to 12% previously, according to UBS.

The threat of the country does not buy Treasurys sales have shun the bond market before. In addition to any remedies that China can take, it is thought that it reduced its goods in an effort to defend its currency.

More aggressive actions to reduce properties are considered a nuclear option that may further aggravate the ongoing trade negotiations. However, its effect is not clear.

UBS estimates that if the reduction is slowly, it will likely result in a 10-year Treasury benchmark beneficiary increase of almost 0.4 percentage points.

"If China's Treasury sales can cause or impact more global environmental hazards, the positive impact on the Treasury benefits may be smaller than the estimate if private investors will continue with their buying the Treasury, "UBS strategist Chirag Mirani and others told a note to clients.

The share of China's total debt compared to other global governments has dropped to 17.3%, the lowest since June 2006. Japan is the second largest owner, with $ 1.08 trillion, while the UK exceeds the third area while raising its level to $ 317.1 billion.

The ownership of the US foreign debt government has hit a new record of $ 6.47 trillion, up 4% from a year ago, as the total government debt continues to grow and is now ahead of $ 22 trillion. Foreign residents are increasing their rest by $ 23.9 billion.


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