China is selling down US Treasuries exposure?

China is selling down US Treasuries exposure?
Charles Cecil
Opin Partners, LLC

- China's real position is best seen through the sum of their "visible" actions and HK
and UK actions: net position is increased, especially if viewed on a six month
average or over the post-crisis period.
- My sources in major continental banks are looking for the Euro to stabilize around 114
- China definitely needs the US to remain stable and will do whatever it can to prevent
a dollar flight. I mean, who else have they got that they
can actually rely on politically and economically (to the extent that we want to
separate the two!).
- So, $3 trillion or if you like, $7 trillion of US T is maturing in the near term, it
is useful here to think like a portfolio manager for a major
institutional investor: am I seriously suggesting that I am going to move my exposure
from US T to say... what? I mean, I have to balance
my risk globally right? If I move out of US T, I have to look at the country risk
weighting and what the implication for the globe's economies
if the US really does experience a major blow out. Net, net, I have to conclude that
apart from hard ownership (with very low leverage) of
commodity resources (and I don't mean through publicly traded securities), I want the
US exposure as the US remains the most vibrant
hothouse for creating wealth without political risk. Really, how many of you global
portfolio managers would be ready to move your
exposure from US T to the big growth engines of India, Brazil or China? No, you are
going to reallocate from some less appetizing
countries such as Russia, Italy, Spain or UK (oh wait, what's happening to
currencies?)