Over a period that was maybe a couple of years back – I can’t exactly recall – one of the propositions I regularly put forward in discussions about the relative economic strengths of the USA and China was the idea that the Chinese could seriously impact US financial policy by dumping their then huge holdings of US Treasury stock.
An oddity and an explanation?
With US bond yields hitting levels that don’t seem fully justified by the market expectations of medium term interest rates, I have been struggling in discussions to explain to subscribers why, with recessions ever more threatening in developed economies, no-one was buying bonds. Stocking up on longer duration bonds would be the logical thing to do when the market cycle is where it is now.
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