ML-Implode News - Trump May Be Turning China's $1.16 Trillion Of Treasuries Into A Weapon

``For more than a decade, politicians have expressed concern that China and other foreign government could use their significant stakes in Treasuries against the U.S. by dumping them on the market. Such a move would potentially drive borrowing costs throughout the U.S. sharply higher. Bond market conventional wisdom has been that this would be unlikely because it would reduce the value of the seller's remaining reserves, weakening it's own capital bulwarks against a future crisis. Trump's pugnacity mixed with his seeming willingness to ignore facts contrary to his argument make it hard to assess his motives, which may scramble conventional thinking and raiseÂ the risks of an unorthodox response from China.''

The "weapon" has been brandished before (think: China's little "shove" to make sure Fannie and Freddie would be bailed out in 2008); it is a problem that must be dealt with in some fashion eventually. Perhaps daring China to dump its Treasuries, then absorbing them with more QE (and higher interest rates, to the extent protecting the dollar is desired) is right in the Trump playbook (or maybe: he just has no clue what he's doing, and actually believes his own propaganda that "China is responsible" in some primary sense for our economic ills)...

Relevant:

Trump May Be Turning China's $1.16 Trillion Of Treasuries Into A Weapon