Taps Coogan – December 4th, 2022
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China’s holdings of US Treasuries have plunged below $1 trillion for the first time in decades, as the following chart from Crescat Capital’s Tavi Costa highlights.
Whether this is a deliberate strategy by China to dump US dollar assets or the result of slowing economic activity, large budget deficits, and shrinking FX reserves is debatable. It’s probably both.
Regardless, the trend underscores a looming treasury demand problem as the Fed continues its largest ever QT program and Washington continues to pump out multi-trillion dollar deficits.
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