Founding BRICS members China and Brazil along with newcomer Saudi Arabia are quietly unloading their US Treasury holdings.
New numbers from the U.S. Treasury Department show China’s ownership of Treasury securities dropped from $835.4 billion at the start of July to $821.8 billion at the end of the month – a decline of $13.6 billion.
Meanwhile, fellow BRICS member Brazil pared its Treasury holdings by $2.7 billion in the same time frame, from $227.4 billion to $224.7 billion.
And Saudi Arabia trimmed its holdings from $108.1 billion to $109.2 billion, for a $1.1 billion reduction.
In addition, BRICS founding member India saw its treasury trove shrink from $235.4 billion in June to $233.1 billion in July.
And the United Arab Emirates, another incoming BRICS member, reduced its treasury holdings by $300 million from $65.2 billion in June to $64.9 billion in July.
Adam Kobeissi, founder and editor-in-chief of The Kobeissi Letter, says the sell-off is now impossible to ignore.
“Since their peak roughly a decade ago, China has unloaded nearly $500 billion of US Treasuries. Why is China selling US Treasuries so aggressively?
One answer is a potential slowdown of their economy. Another is that this could be part of a broader strategic shift. Regardless, this is a trend you can’t ignore.”
A bond market sell-off and a rapid rise in Treasury yields has triggered financial chaos in recent days and weeks.
On Friday, a stronger than expected jobs report added more fuel to the flame, with the 10-year yield touching a high of 4.85% as the 30-year crossed 5%.
According to the CME’s FedWatch tracker, 72.9% of investors believe the Fed will keep interest rates where they are next month, while 27.1% believe the Fed will further increase rates by another 25 basis points.
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