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Matt's Market Insights


Worried about China dumping US Treasuries?


Recent data from the Treasury Department shows that China bought more US Treasury debt in October than any other foreign country. The increase of $10.7 billion was comprised mostly of short-term Treasury bills, which shows that China is very alert to the looming interest rate risk. The price of short-term bonds does not swing as wildly as those of long-term bonds when market interest rates change.


Dow Theory Letters has recommended low exposure to bonds during this period of rising rates, and continues to maintain that recommendation. If you are invested in bonds, we would suggest you follow the Chinese, and focus on short-term instruments.


Based on data from CRT Capital Group, China's Treasury holdings as of October were at the second highest level ever. The October holdings of 1.3045 trillion are second only to holdings of $1.3149 trillion in July 2011. It should be comforting that foreign ... Log in or subscribe to continue reading.

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