#TimesUp: 'Bonds, like men, are in a bear market,' says Bill Gross

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The dollar fell against other currencies on Wednesday after a report that China may slow or halt its US treasury purchases, with the greenback falling more than 1% against the Japanese yen.

However it was again more bark than bite, and the Chinese regulator has now soothed market worries saying that it was already diversifying its foreign exchange reserves, and its Treasury holdings are "market driven".

The Bloomberg report said that trade tensions between the two countries could provide a reason for Beijing to slow down or halt the purchases. Benchmark bonds reversed earlier gains on the news, with the yield on 10-year Treasuries climbing for a fifth day.

"If China was to reduce their involvement in buying USA government debt, it would have a significant impact on interest rates, which is why I think we're seeing our banks lead the market lower today", said Christopher Conway, head of research and trading at Australian Stock Report.

"The US Treasury market is a deep, robust market within the world and so we are confident that our economy, with the economy strengthening, that it will remain a deep, robust market", Malpass said when asked to comment on the report.

A spokesperson for the State Administration of Foreign Exchange (SAFE) said in a statement published on its Chinese website, that the "news may quote the wrong source of information, or it may be fake news".

Such measures - already used by Beijing against countries like South Korea - could include informal regulatory actions that deny market access to USA firms and goods, they said.


"The U.S.is about to issue a whole lot more debt in an environment where the demand for that debt is about to go down", said Daniel W. Drezner, a professor of global politics at the Fletcher School of Law and Diplomacy at Tufts University. The holdings increased by 6.6% from a year earlier, but were down from a 12-month peak of $1.2 trillion in August.

China owned at least $1.2 trillion of Treasury debt as of October, according to USA government data.

Buying Treasuries keeps the dollar stronger relative to the yuan, which has helped Chinese exports in the past.

On Tuesday, Bill Gross, the high-profile fixed-income investor, tweeted: "Bond bear market confirmed today".

Beijing is the biggest holder of United States debt and the news was seen by some as a veiled threat to President Donald Trump following his tough talk on global trade and, in particular, what he sees as China's unfair practices. Moreover, the Bloomberg report noted that so far officials have simply recommended slowing or halting purchases of Treasuries - it is not yet clear whether this been adopted as policy.

U.S. Treasury yields jumped to 10-month highs on Wednesday.

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