Dollar-denominated risk assets, including asset-backed securities and corporates, are no longer wanted at the State Administration of Foreign Exchange (SAFE), nor at China’s large commercial banks. The Chinese government has ordered its reserve managers to divest itself of riskier securities and hold only Treasuries and US agency debt with an implicit or explicit government guarantee. This already has been communicated to American securities dealers, according to market participants with direct knowledge of the events. Read more …
UPDATE: Is this connected?
UPDATEx2: JAPAN Is Now Largest Holder of U.S. Debt
China threatened to dump US debt this week over the sale of $6.4 billion of American weapons to Taiwan. But, it looks like it’s already started. In December China dumped $34.2 billion in US treasuries making Japan the largest holder of US debt.