It’s (Semi) Official: China Sells Treasurys to Support Currency

China has to tap its stash of savings to prevent an outright crash
It’s (Semi) Official: China Sells Treasurys to Support Currency
US Secretary of State John F. Kerry (L) confers with US Treasury Secretary Jacob Lew (R) during the closing session of the seventh US-China Strategic and Economic Dialogue (S&ED) at the US State Department in Washington DC, June 24, 2015. Chris Kleponis/AFP/Getty Images
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Despite a little 5 percent hiccup in the Chinese stock market—most likely engineered—it is now becoming ever more official that the Chinese regime has lost control.

According to reports by Bloomberg, insiders have confirmed that China is heavily selling U.S. Treasurys on the market in order to contain the yuan devaluation that started two weeks ago. Because the volume is so large, Chinese representatives are speaking to their U.S. counterparts to avoid market turmoil—with limited success.

Société Générale estimates the amount sold in the last two weeks to be higher than $100 billion, and if this rate continues, we could see sales of over $500 billion for the year easily, much higher than a previous estimate of $304 billion. This could have a substantial impact on Treasury yields and therefore U.S. financial markets.

Valentin Schmid
Valentin Schmid
Author
Valentin Schmid is a former business editor for the Epoch Times. His areas of expertise include global macroeconomic trends and financial markets, China, and Bitcoin. Before joining the paper in 2012, he worked as a portfolio manager for BNP Paribas in Amsterdam, London, Paris, and Hong Kong.
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