Was China partly responsible for the recent bond rout?

Kit Lowe

Lowe Capital Management

Weekend March capital flows (TICS) data show China as the biggest buyer of Treasuries with holdings up $37B in March. Unbelievably Belgium was the biggest seller with holdings declining a stunning $92.5B. However Deutsche's Alan Ruskin believes that this activity is due to China activity through Euroclear. China buy flows plus Belgium sell flows suggests China was a net seller of US Treasuries by $50B. Remember that China official reserves declined by $71B March . Luckily for the Chinese they were sellers in March before the recent April/May decline in prices. But with oil exporting nations and Japan not taking up the slack did Chinese selling perhaps precipitate the recent rise in treasury bond yields ?

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Kit Lowe
Kit Lowe
Executive Director
Lowe Capital Management

We trade Australian interest rate futures with a heavy emphasis on market making and relative value.


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