Pimco could add US Treasuries if market weakens further: Ivascyn

Stock Rally Tested by Rise in Yields; Yen Climbs: Markets Wrap

Stock Rally Tested by Rise in Yields; Yen Climbs: Markets Wrap

"All of last year there was this fantastic correlation between USA 10-year yields and dollar-yen and people put on what is known as pairs trades", said Greg Anderson, global head of FX strategy at BMO Capital Markets in NY. However, market participants suggested it would take time to verify any slowdown in Chinese purchases of U.S. Treasurys as new data emerges in the coming months. A spokesperson for the State Administration of Foreign Exchange (SAFE) said in a statement published on its Chinese website, that the "news may quote the wrong source of information, or it may be fake news".

Beijing is the biggest holder of United States debt and the news was seen by some as a veiled threat to President Donald Trump following his tough talk on global trade and, in particular, what he sees as China's unfair practices.

"It's certainly more of a hawkish tilt in the minutes", said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.

"Gold traders confirm that it was because the Government announced in advance that it was planning to sell such a large quantity of gold that the markets became depressed", The Telegraph reported then-shadow secretary to the Treasury Philip Hammond as saying in 2009.

Why would China dump US debt? "I don't think that's worked out so poorly for the U.S".

China denied on Thursday a report that it may slow or cease its purchases of US Treasury bonds, calling it a possible case of "fake news" after the dollar tumbled following the story.

"But China is the largest buyer [of US Treasuries], what it says will deeply influence investors' sentiments".

Beijing keeps a big share of its $3.1 trillion in foreign currency reserves in Treasury debt, which is considered safe and easy to trade.

China already holds a huge amount of US government debt.

Reports of Chinese caution over U.S. debt could affect the bond yield curve and investor sentiment, and the doubts caused by the speculation contributed to falls on Wall Street overnight.

The stakes may be higher now as tensions with the USA have been building since the election of President Donald Trump, who's been critical of the American trade deficit with China and other countries.

Yields slipped and bond prices clawed back their earlier losses after a solid 30-year bond auction.

Brent has gained 5 percent since the beginning of the year, picking up from its late-year surge.

ING Bank Greater China economist Iris Pang said it would be no surprise if China wanted to revise its foreign reserves portfolio when global investors started to walk away from US Treasuries whose issuance cost could increase after the tax cut in the US.

China wants its own currency, the yuan, pegged to the dollar.

The yen has risen this week after the Bank of Japan on Tuesday trimmed its buying of long-dated Japanese government bonds in market operations.

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