I see that China's selling of US treasuries as more of an effort to support the yuan at a time when the US dollar has been strong, although there has been some diversification away from US treasuries within China's FX reserves.
China needed stimulus regardless. The bulk of the stimulus that was announced this week wasn't something that they needed to "fund", and reflected more of an easing of monetary policy and facilitating lending. They will probably look to fiscal spending too in time.
And as far as de-dollarization goes, as much as the world seems to want to diversify away from dollar dominance, there's nothing that can replace it completely in regards to the depth and liquidity of the US treasury market and financial markets. It's just too large.
What's your view on them selling US treasury bonds to fund the stimulus? Is it a start of dedollarisation in case there's some kind of wider conflict?
I see that China's selling of US treasuries as more of an effort to support the yuan at a time when the US dollar has been strong, although there has been some diversification away from US treasuries within China's FX reserves.
China needed stimulus regardless. The bulk of the stimulus that was announced this week wasn't something that they needed to "fund", and reflected more of an easing of monetary policy and facilitating lending. They will probably look to fiscal spending too in time.
And as far as de-dollarization goes, as much as the world seems to want to diversify away from dollar dominance, there's nothing that can replace it completely in regards to the depth and liquidity of the US treasury market and financial markets. It's just too large.
Great article and reply as always Janu not slack