Usman Salis
⬤ China's making moves that bond traders are watching closely. Regulators in Beijing are telling their banks to dial back on U.S. Treasuries—not dump them overnight, but ease out gradually. Bloomberg caught wind of the guidance, which points to concerns about volatility and concentration risk.
⬤ The real question is what happens if this picks up steam. When a heavyweight like China steps back, even slowly, it means less demand for U.S. debt. Basic economics says that pushes yields up and could weigh on the dollar.
⬤ This isn't panic mode—it's portfolio rebalancing. But markets tend to overreact when sovereign wealth managers change course. And this fits into a bigger picture: countries are gradually moving away from heavy dollar concentration, spreading reserves across different assets instead of loading up exclusively on U.S. government bonds.
⬤ The takeaway? Watch Treasury yields and USD momentum. If China's trimming continues, it could mean higher borrowing costs and a softer dollar ahead.
Usman Salis
