The big news early this morning is that Chinese officials have publicly announced that they are considering halting the purchase of additional US Treasurys.
This news initially sent shock waves though the “markets” (still in quotation marks because they are no longer true markets, distorted beyond recognition by ten years of coordinated central bank intervention) with both bonds and stocks selling off.
Naturally, “stabilizing” forces showed up almost immediately; purchasing US equities in the futures market while also selling gold. But the fear in response to China's declaration remains evident.
First, here’s the news:
China Weighs Slowing or Halting Purchases of U.S. Treasuries
Jan 10, 2017
China added to bond investors’ jitters on Wednesday as traders braced for what they feared could be the end of a three-decade bull market.
Senior government officials in Beijing reviewing the nation’s foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries, according to people familiar with the matter.
The news comes as global debt markets were already selling off amid signs that central banks are starting to step back after years of bond-buying stimulus. Yields on 10-year Treasuries rose for a fifth day, touching the highest since March.
The timing couldn’t have been more inauspicious for the Treasury market, which was already weak and tottering at the top of a very tall staircase. It had already been selling off for two reasons; (1) the Fed is in a rate hiking campaign and (2) the US tax act passed recently is going to result in a lot more Treasury paper being released to fund increased US federal deficits.
by davefairtex 
