🚨 China Pulls Back from U.S. Treasuries — Strategic De-Dollarization Underway
China has instructed state banks to cut U.S. Treasury exposure, signaling a shift from paper assets to hard assets. Official gold buying for 18 months underscores the move.
Key implications:
China, once a price-insensitive buyer, is reducing Treasuries by hundreds of billions
Potential outcomes:
1. New buyers for U.S. debt (unlikely at scale)
2. Federal Reserve steps in → balance-sheet expansion & inflation pressure
Bond market volatility likely to rise; liquidity and funding costs less predictable
Bottom line:
The era of the East quietly financing Western deficits is ending. This is not a headline trade — it’s a regime shift.