China has been "quietly" reducing its exposure to US sovereign debt over the last few months - or at least it was in May and June. China's holdings at the US treasury dropped from around $900 billion in April to $868 billion in May and $844 billion in June. At the same time, it has picked up purchases of Japanese debt and overnight announced that it would double its holdings of Korean sovereign debt (to the endless joy of the extremely export-dependent Koreans, no doubt). This is an interesting theme that bears watching, since it means that the US will have to turn inward for more financing if this continues (already happening to some degree with banks and private investors extensive buyers of US debt.) At the same time, China has largely halted the appreciation of its currency
Comments