Recently, State Street, the world's largest custodian bank, warned that asset managers still hold large amounts of US dollar assets, suggesting that the dollar sell-off is likely to continue. The recent unlimited quantitative easing of monetary policy in the United States and persistently high inflation have led to a large number of US dollars and US Treasuries being sold off by investors. As the world's second largest creditor of U.S. bonds, China has also been the first to have U.S. bonds for six consecutive months. Market experts and investors are concerned about this trend and advise investors to be cautious about their US dollar assets, as well as to pay attention to investment opportunities in RMB assets. Against this backdrop, this article will examine the reasons for the sell-off in the US dollar and the impact on China's holdings of US bonds, and provide some advice for investors.
1、.Accommodative policies during the pandemic
Since the outbreak of the pandemic, the United States** has implemented a series of unlimited monetary quantitative easing policies to stimulate economic recovery. However, this policy has also led to a surplus of money**, which in turn has raised the risk of inflation. Investors' concerns about this monetary easing, as well as the depreciation of the dollar exchange rate, have led them to sell their dollar assets.
2、.U.S. bond issuance hit a record high
In response to the impact of the epidemic and fiscal needs, the United States issued a large number of bonds, making the amount of U.S. bonds hit a record high. Investors' concerns about the U.S. Treasury market have also added to the selling pressure on the dollar. Japan and the United Kingdom, as the two major creditors of the US debt, have also taken up US debt, which has exacerbated the development of the US debt crisis.
3、.Concerns about economic uncertainty in the United States
The recovery of the U.S. economy has been relatively slow, and the political instability and the impact of friction have weakened investors' confidence in the U.S. market. In contrast, the continued development of China's economy and the stability of policies have boosted investor confidence in China. Global investors have turned to the Chinese market, which has led to a further increase in the sell-off against the US dollar.
1、.* Space expansion
Under the influence of the global sell-off of U.S. bonds, China's holdings of U.S. bonds have also been decreasing. At present, China's more than 700 billion U.S. bonds have decreased a lot compared with the peak of more than 1 trillion U.S. dollars, but it still faces a large space. As the US dollar continues to come under pressure from the sell-off, the dynamics of China's ** US bonds may intensify further.
2、.Investment opportunities in RMB assets
With the weakening trend of the US dollar, RMB assets will usher in an inflection point of investment opportunities. The Fed is widely expected to cut interest rates next year, which will further weaken the attractiveness of dollar assets. In contrast, China's low valuation and large room have attracted the attention of international funds. As a result, investors can look at high-quality Chinese companies** as safe-haven assets in search of better investment returns.
3、.The internationalization of the renminbi has accelerated
The sell-off of the US dollar is also a boost to the internationalization of the RMB. As the world's second-largest economy, China's economic influence is growing, and the renminbi's status is gradually rising. As China continues to promote financial opening and reform, the use rate of RMB in international investment will further increase, which is of great significance for the sustainable development of China's economy.
1、.Diversify your portfolio
Faced with the risk of a sell-off in the US dollar, investors should diversify their portfolios and reduce their dependence on US dollar assets. In addition to holding US dollars, you can consider investing in other currencies, ** and other assets to reduce the overall investment risk.
2、.Focus on RMB assets
With the weakening of the US dollar and the acceleration of the internationalization of the RMB, investors can pay attention to investment opportunities in RMB assets. The appreciation potential of the renminbi and the growth space of China** will attract more investors.
3、.Pay close attention to the international situation
Investors should always pay close attention to changes in the international situation, especially the direction of the U.S. economy and policy. Political, economic, and geopolitical factors can all bring uncertainty to the market, and investors need to be prepared and make timely adjustments to the situation.
In summary, the trend of the US dollar being sold off has attracted widespread attention around the world and has had a certain impact on China's holdings of US bonds. As investors, we should pay attention to market changes, diversify our portfolios, and keep an eye out for investment opportunities in RMB assets. With the weakening of the US dollar and the internationalization of the renminbi, China's economy and financial markets will usher in more investment opportunities, and we need to seize these opportunities to add more possibilities for our own investment. Both Chinese and global investors should remain vigilant and adjust accordingly according to market conditions. Strengthen risk management and investment decision-making capabilities in order to obtain better returns in an uncertain market environment. Now is the time to reassess asset allocation and risk management strategies to address the challenges and opportunities presented by the sell-off in the US dollar.