China - the ultimate contrarian
A step many thought should have been taken much earlier has been perfectly timed by China as it sold off over $70B worth of US treasuries in May. I would see it as the ultimate contrarian move. At a time when the Euro was taking the worst beating in over a decade of its existence and US treasuries (and bonds) were at astoundingly low yields, China dumped some of its holdings into the frantic treasuries market and switched to European bonds instead. The timing couldn’t have been better as they were able to sell their treasury holdings with little impact, something which has always been a worry. On the other hand, they picked up european bonds at their worst with a Euro which was at multi-year lows. Will this diversification continue/quicken and is China really picking up more and more in Gold reserves? We’ll have to wait for another announcement from the CCP.