Is China Beginning To Dump US Treasuries ?

The upshot you're supposed to takeaway is that the long-awaited dump is on!


There's just a few problems:

    The size of the selling is tiny. It doesn't look like it, but since the bottom of the Y-axis it $1.06 trillion, you can see that the selling amounts to barely anything.
    Last year we saw a similar dip from October through March. Then it went higher again. There are obviously some cycles here.
    China's Treasury holdings aren't dictated by mere whims about what the country does or doesn't think about the health of US Treasuries. The huge stockpile if a function of the Chinese trade surplus with the US, and the need to recycle that surplus into something, and obviously Treasuries are the only real instrument up to the task.

    There's no connection between undulations in Chinese holdings and US Treasury yields, so you don't have to worry about borrowing costs spiking if Chinese Treasury holdings go down.

    China is globalizing, doing big business in more and more countries: Naturally it will want to re-arrange its portfolio of reserves in a way that reflects the changing world.

So anyway, don't worry about it. Everything's cool.