Is China quietly dumping US Treasury debt?
When investors buy bonds, they often do hold them until maturity, and the Chinese have been doing that with US treasury debt until now. (I.e. when you buy, say, a 5 year treasury bond, this means that in 5 years it matures and the US treasury pays you the face amount. You can sell it to someone else before it matures, though.) If the Chinese are indeed selling massive quantities of US treasury bonds in the secondary market (we’ll find out from the TIC data in a few weeks), they are competing with the US treasury selling newly issued bonds (primary market). The increased supply drives the bond prices down (and the yields up in other words). Some folks argue that this hurts the Chinese because the market price of the bonds that still retain would fall. But perhaps they don’t care about marking their positions to market – and the future cashflows aren’t affected.
