The U.S. Treasury is on the verge of defaulting, and according to Yellen's latest, the U.S. Treasury will run out of cash by June 5.
The latest news is that the White House and congressional representatives have reached a tentative agreement for the time being, but there is not much confidence that this agreement will survive Congress.
The ceiling crisis has not yet been lifted, and a default on US debt could happen at any time.
Unexpectedly, in the data released by the U.S. Treasury Department this month, China actually increased its holdings of U.S. bonds by 20.5 billion, just before the U.S. debt was about to defaultIs there any special purpose?
Sometimes I really don't understand why the United States always likes to focus on China
At present, the balance of the US national debt is as high as 314 trillion, China's holdings as of late March were only slightly less than 870 billion, which is only 28% only.
But every time China's U.S. bonds make the United States very nervous, and this time the unexpected increase in China's U.S. bonds actually makes the United States very excited.
In fact, Japan holds more U.S. bonds than we do, and the Fed holds the most, and they should be more responsible for the trend of U.S. bonds.
In 2022, Japan sold $200 billion in U.S. debt.
Because the U.S. federal government has been raising interest rates, causing the yen to depreciate, Japan** decided to sell U.S. bonds and continue to buy yen to stabilize the yen.
The U.S. has been raising interest rates, so Japan** has been reducing U.S. debt.
The Federal Reserve sold more than $550 billion of US Treasury bonds within a year, under the name of "shrinking its balance sheet."
It is the Fed's vigorous sell-off that has caused the lack of undertakers in the bond market, and even led to a lack of liquidity in US bonds, **substantially**.
In the long run, we will continue to reduce US debt, which we have cut by more than $170 billion in the past year, and our holdings of US debt have fallen below $900 billion.
As for the increase in US bonds in March, it is likely to come from a passive increase.
We can make this judgment from the change in the yield of the US 10-year Treasury bond.
The banking crisis in the United States broke out in March, and a large amount of funds poured into U.S. bonds, resulting in a shortage of U.S. bonds.
It was during this period that we saw an increase in China's holdings of U.S. bonds, which in fact only came from the growth of **.
And we can further infer that in March, China also secretly ** part of the US debt, but the ** amount is less than the increase caused by the US debt***.
Treasury yields fluctuated after April, but they did not change much, but they climbed sharply in May and continued to fall sharply.
So if nothing else, in the data released by the U.S. Treasury Department in the next two months, you will see that the U.S. bonds held by China's central bank will fall sharply again.
The United States believes that China regrets selling, so it will increase its holdings, but it just does not understand the layout of the yuan.
The greater layout of the renminbi lies in continuously improving the international status of the renminbi.
According to the statistics on the use of the US dollar, the US dollar now accounts for 58% of the world's foreign exchange reserves. While this figure still appears to be more than half, it is a one-fifth decrease from the 73 per cent share of the United States dollar in 2001.
Nowadays, the process of going to the dollar is still advancing, the proportion of the use of the dollar is still declining, the status of the dollar has obviously been shaken, and the RMB has better and better opportunities.
Therefore, at this time, we will not be too concerned about increasing holdings or ** US bonds, we are more concerned about the long-term layout of the RMB. Again, this is something that the United States did not expect.