China's Yu Tells U.S. Not to Be Complacent About Debt June 2 (Bloomberg) -- China's former central bank adviser Yu Yongding will meet Treasury Secretary Timothy Geithner today and tell him the U.S. shouldn't be complacent about China continuing to buy Treasuries. "I wish to tell the U.S. government: `Don't be complacent and think there isn't any alternative for China to buy your bills and bonds', Yu said in an interview yesterday. "The euro is an alternative. And there are lots of raw materials we can still buy."
June 2 (Bloomberg) -- China's former central bank adviser Yu Yongding will meet Treasury Secretary Timothy Geithner today and tell him the U.S. shouldn't be complacent about China continuing to buy Treasuries.
"I wish to tell the U.S. government: `Don't be complacent and think there isn't any alternative for China to buy your bills and bonds', Yu said in an interview yesterday. "The euro is an alternative. And there are lots of raw materials we can still buy."
Federal Reserve puzzled by US yield curve steepening WASHINGTON, May 31 (Reuters) - The Federal Reserve is studying significant moves in the U.S. government bond market last week that could have big implications for the central bank's strategy to combat the country's recession. But the Fed is not really sure what is driving the sharp rise in long-dated bond yields, and especially a widening gap between short and long term yields. Do rising U.S. Treasury yields and a steepening yield curve suggest an economic recovery is more certain, meaning less need for safe haven government bonds and a healthy demand for credit? If so, there might be less need for the Fed to expand the money supply by buying more U.S. Treasuries. Or does the steepening yield curve mean investors are worried about the deterioration in the U.S. fiscal outlook, or the potential for a collapse in the U.S. dollar as the Fed floods the world with newly minted currency as part of its quantitative easing program. This might be an argument to augment to step up asset purchases. Another possibility is that China, the largest foreign holder of U.S. Treasury debt, has decided to refocus its portfolio by leaning more heavily on shorter-term maturities.
WASHINGTON, May 31 (Reuters) - The Federal Reserve is studying significant moves in the U.S. government bond market last week that could have big implications for the central bank's strategy to combat the country's recession.
But the Fed is not really sure what is driving the sharp rise in long-dated bond yields, and especially a widening gap between short and long term yields.
Do rising U.S. Treasury yields and a steepening yield curve suggest an economic recovery is more certain, meaning less need for safe haven government bonds and a healthy demand for credit? If so, there might be less need for the Fed to expand the money supply by buying more U.S. Treasuries.
Or does the steepening yield curve mean investors are worried about the deterioration in the U.S. fiscal outlook, or the potential for a collapse in the U.S. dollar as the Fed floods the world with newly minted currency as part of its quantitative easing program. This might be an argument to augment to step up asset purchases.
Another possibility is that China, the largest foreign holder of U.S. Treasury debt, has decided to refocus its portfolio by leaning more heavily on shorter-term maturities.
Inflation, or dollar devaluation, or both? In the long run, we're all dead. John Maynard Keynes
There is also China's more immediate problem that its foreign reserve growth of all kinds has slowed drastically as exports have dried up due to the recession. It won't buy as debt of any kind, particularly long-term debt, because it doesn't have as much income from trade any more.
I agree that the Chinese are not trying to get that rebalancing started, but the effect of their speeches on the topic could lead to it anyway... In the long run, we're all dead. John Maynard Keynes
