China

China’s ‘self-destructive nuclear option’ in trade war: Selling US Treasury bonds

5/13/19
from CNBC,
5/13/19:

Questions persist that China might stop buying U.S. debt as the two sides engage in a trade war. The issue arose Monday following a tweet from the editor of a Chinese state-run newspaper. Most experts think a China exit from the Treasurys market would be a last resort and hurt it more than it might the U.S.

“It’s a self-destructive nuclear option,” said Robert Tipp, chief investment strategist and head of global bonds for PGIM Fixed Income. “Maybe it helps them as a bargaining chip, but it’s endangering the value of something they’re deeply involved in.”

In fact, the move actually could help the U.S.

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