U.S. Treasury yields are soaring. There are rumors that China is selling a large amount of U.S. Treasury bonds. Is the Federal Reserve going to urgently rescue the market?

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ABMedia
04-09
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U.S. President Trump intensified pressure on China and promised to advance tariff measures globally, causing financial markets to experience a new round of volatility, with stock markets declining and even U.S. Treasuries, traditionally seen as a safe-haven asset, being sold off. Gold bull Peter Schiff warned that with the 10-year Treasury yield hitting 4.5%, the Federal Reserve should urgently announce a QE policy to prevent a stock market crash similar to 1987. BitMEX founder Arthur Hayes referenced the MOVE index, which measures bond market volatility, suggesting that its surge might prompt Federal Reserve intervention, potentially through interest rate cuts or quantitative easing to stabilize the market. The MOVE index, currently at 139.88, indicates increased uncertainty in the U.S. Treasury market. Hayes interpreted this surge as a "green light" for potential Fed intervention. According to Bloomberg, the U.S. Treasury auction showed weak participation indicators, which is not a good sign for upcoming 10-year and 30-year bond auctions. Uncertainty related to Trump's policies is driving traders to seek alternatives to U.S. Treasuries, with German and Japanese bonds becoming more attractive to foreign buyers. China, the second-largest U.S. Treasury holder with $760.8 billion, has been gradually reducing its holdings since 2013. Rumors suggest China sold $50 billion in U.S. Treasuries, causing yield increases and damaging bond prices. Some believe this could be a way to pressure the U.S. China continues to purchase gold, reducing its dependence on the U.S. dollar and Treasuries. The People's Bank of China has been guiding the yuan's depreciation for five consecutive trading days, attempting to mitigate trade war economic impacts while maintaining financial market stability.

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Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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