Comments on: Two trillion and counting …

By: Crossover Point for China?

Crossover Point for China? — Wed, 29 Jul 2009 22:49:34 +0000

[...] Setser’s Follow the Money blog, in which he documents China’s recent passing of the USD$2T threshold in their reserves: China’s latest surge in reserves – a surge that look its total holdings over two trillion [...]

By: Weekend Reading for July 25th | EconUp

Weekend Reading for July 25th | EconUp — Sun, 26 Jul 2009 07:49:35 +0000

[...] China’s reserves are rising and so are its holdings of U.S. [...]

By: RodgerRafter

RodgerRafter — Sun, 26 Jul 2009 00:30:11 +0000

I suspect that China is quite happy to have high levels of inflows now because this takes some pressure off of the government to keep providing a high level of stimulus. They’d rather have private industry pursuing profitable opportunities in the domestic and export markets.

A big part of the outflow problem late last year was likely due to hedge fund delveraging. As you state, “China’s stimulus has worked.” Now a more stable group of investors is moving in at better prices and for better reasons. China is the best growth market both for investors and for companies wanting to sell their goods. They can ease off the stimulus as long as this continues.

By: Judy Yeo

Judy Yeo — Sat, 25 Jul 2009 11:11:26 +0000

diversification away from US dollar assets can only take place at a snail’s pace particularly when much of the world is watching you not unless you want to start a fire sale like situation in which case you can also expect collateral damage to your existing holdings. Which brings us to the more politically correct solution – start a fund or sub concern focussed on what might be best described as venture capital with a nationalistic view – fund anything from startups to promising strategic industries and even private companies looking for some funding- China has the opportunity to kill many birds with that one stone – after all, what makes the public happier than seeing some nationalist pride played out commercially – it’ll be the commercial equivalent of the oylmpics – of course, without the gaffes or scandals preferably. The only worrying elements they need to watch out for are transparency and keeping corruption at bay . Of course that’ll raise hackles – if the unease over SWFs is bad, wait till you see what happens if China puts its money where its intentions purportedly are.

By: mark johnson

mark johnson — Fri, 24 Jul 2009 18:15:13 +0000

Since the Wetherd ratio of short term yields matches the internal deficit ratio, there should be a precession of prices.

By: yoda

yoda — Fri, 24 Jul 2009 12:21:42 +0000

anyway, wont touch the bond unless 10yrs yield is above 5% or Bernanke change targetting 0% rate policy and start the exit strategy.

By: Cedric Regula

Cedric Regula — Fri, 24 Jul 2009 05:35:35 +0000

Patience Yoda.

Do not let the Darkside upset you. Remember your teachings.

Helicopter Wen may become an ally of the Bond Jedi. This may give the carry traders and other sympathizers of the Empire cause for concern. This is a powerful Force that can defeat the Darkside! But if deflation concerns and risk aversion return, the Darkside strengthens. So beware, there may be future threats to the Bond Jedi ahead.

Use the TBT Force, Yoda…average down on pullbacks, you should!

By: yoda

yoda — Fri, 24 Jul 2009 03:43:21 +0000

with tsunami supply of gov bond, you will thought bond jedi demand higher yield, but 10yrs still below 4% when DOW already broke up 9000. and you have central banks (china, japan) all crowd into t-bill with 0% interest rate. and this phenomenon can continue to long long long time like FED is targeting 0% and decimating dollar for long long long time. and bond jedi will be missing in action for long long long time.

By: yoda

yoda — Fri, 24 Jul 2009 03:34:02 +0000

you do know Bernanke (Sith Emperor) and Treasury (Sith Apprentice) will manipulate/push down long date yield and beat Bond Jedi silly right?

By: Cedric Regula

Cedric Regula — Fri, 24 Jul 2009 00:14:24 +0000

Jason

I think it’s kind of a snowball effect. Much of this is re-funding, or reshuffling of old debt, and the average maturity of treasury debt has been shortening up to about 4 years now. So they have to sell shorter term notes and bills more often. Add this years $1.8 Trillion in new deficit financing and that explains the ever bigger numbers. All this is just masking the fact that long term rates are too low, but I think the Treasury wants to keep it that way because they don’t want to drive up mortgage rates by putting a lot of longer term treasuries up for auction.

Also the 10 year budget already calls for another 8 trillion in borrowing after this year. So we aren’t getting anything out of the way.