Earlier on Tuesday we proposed that one of the reasons gold was rising was because the market, despite the taper, was still being overloaded with liquidity relative to the number of safe US assets in circulation.
But we’ve also speculated in the past that if and when China begins to unwind its US Treasury stock, as it may be forced to if it needs to defend the RMB from devaluation, then the Treasury stock it releases could end up injecting a fair number of dollar assets — at least on a temporary basis — into the global dollar system.
The sequence of events might consequently look something like this: Read more
Presenting, the latest US TIC flows as put together by Gennadiy Goldberg at TD Securities:
After numerous false starts, China appears to be buying fewer US assets.
At least, according to the analysts over at Standard Chartered. Read more
The spike in 10-year US Treasury yields just after November TIC data came out:
Foreign governments and central banks sold a record amount of US financial assets in January as China continued to reduce its holdings of US Treasuries. China sold $5.8bn of Treasury securities in January, the third month running that it cut its holdings, government figures showed. However, revisions to previous data meant the country regained its position as the top holder of US government debt, overtaking Japan.