Gold jumps on report China may slow US Treasury buys

Gold jumps on report China may slow US Treasury buys

Gold jumps on report China may slow US Treasury buys

On Wednesday, Bloomberg, citing unidentified people familiar with the matter, said China found that USA bonds were becoming less attractive and that trade tensions with the US could provide a reason to stop buying American government paper. The report suggests that China feels US debt is becoming less attractive when compared to other types of investments.

The Bank of Japan's decision to trim its regular purchase of longer-dated debt sparked some nervousness among traders that helped precipitate the move higher in USA yields.

Investors monitor stock prices in a brokerage house in Beijing on January 2, 2018. "There's no way on earth the Chinese stop buying US Treasuries", said Robert Pavlik, chief investment strategist, SlateStone Wealth in NY.

"However, rising US inflation suggests some upside risks to the United States dollars are potentially building, emanating from inflation-driven higher USA yields, and larger than expected Fed rate hikes". Japan was second with US bond holdings worth $1.09 trillion.

More than $60 billion in combined bond sales by the U.S., the U.K., Japan and Germany are set to take place this week, which may test the appetite of investors for debt at current levels.

Remember, yields fall when bond prices rise.

While that amounts to only a small change, the hint of a tapering to stimulus was enough to send bond prices lower, and yields higher.

But others said short sellers were squeezed out by the sudden downshift in yields prompted them to buy back, or "covering", the securities they had borrowed, juicing the late day rally.

The financial market reaction to the Bloomberg report was swift.

Trump slams protections for immigrants from 'shithole countries'
Acosta said the word at least three times on-air. "Racism is a question of power, not a question of attitude", he said. When he got to Haiti, Trump asked why the United States wants more people from Haiti and African countries.

Actor Lee Dong-wook named honorary ambassador for Pyeongchang Olympics
South Korea ambassador Joonkook Hwang welcomed the likely participation of neighbours North Korea. Yarnold has struggled for form this season.

Wyoming Homeless Programs Get $292K in Federal Funding
This year, at the national level, HUD plans to send $2 billion in the grants to more than 7,300 programs helping the homeless. Local Massachusetts communities also report the number of persons experiencing long-term chronic homelessness decreased.

The U.S. 10-year yield rose to 2.56 percent on Wednesday, hitting levels not seen since last March.

ASIA'S DAY: Japan's Nikkei 225 fell 0.3 percent to 23,710.43 and South Korea's Kospi retreated 0.5 percent to 2,487.91.

The Canadian dollar weakened to its lowest level this year, before recovering, as worries of a USA withdrawal from the North American Free Trade Agreement moderated bets that the Bank of Canada will raise interest rates next week.

"You already had this backdrop of rising rates and people are getting nervous", says Boris Rjavinski, senior interest rate strategist at Wells Fargo Securities in NY. "If yields rise too much it would put a halt to growth momentum and slow down the Fed hikes and stock market performance".

The dollar also dropped against most currencies and gold rose.

"This happens every time rates go up", Paulsen explains.

"Bonds, like men, are in a bear market", Gross, manager of the US$2.2 billion Janus Henderson Global Unconstrained Bond Fund, wrote in an investment outlook released Thursday. "The U.S. and China trade policy is a legit risk in 2018".

"It's pretty significant. That takes an important buyer out of the market at the same time you're taking the most important buyer out of the market - the U.S. Fed", said Bruce Bittles, chief investment strategists at Robert W. Baird & Co in Sarasota, Florida.

Related news