T-Bill Dumping by Foreign Nations

Gary North

Foreign central banks are selling off U.S. Treasury debt. //www.garynorth.com/snip/1223.htm

There have been no negative effects for the U.S. government. The dollar remains high, despite the increase in the supply of dollar-denominated debt in world currency markets. Second, long-term T-bond rates have not risen, i.e., the prices of Treasury debt certificates have not fallen.

For years, it looked as though China could get its way in negotiations with U.S. government trade officials. "Cross us, and we will sell our T-bills and T-bonds." Well, they have been selling T-debt, but nothing bad has happened to the U.S. government. //www.garynorth.com/snip/1224.htm

The tremendous demand for dollars, coupled with the tremendous demand for T-bonds, have combined to neutralize the dumping of T-debt by foreign central banks.

A recession will strengthen the dollar and hold down T-bond rates -- the quest for safety and yield.

China's bluff has been called . . . by China.