Eurodollar University Foreigners Are Dumping Record Treasuries — Is This the End?!
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Apr 21, 2025 In this conversation, financial analyst Steve Van Metre shares his insights on the recent surge in foreign sales of U.S. Treasury securities, particularly from China. He discusses the implications of a possible yuan devaluation and the interconnectedness of slowing global economies and trade wars. Steve also highlights contrasting behaviors between public and private investors in U.S. Treasuries, noting increased purchases by the latter. Additionally, he delves into China's economic challenges versus the UAE's strategic moves to invest in U.S. assets, showcasing the complexities of the global monetary system.
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Why Officials Sell and Privates Buy
- Foreign governments sell U.S. Treasuries mainly during dollar shortage periods, not out of political spite.
- Meanwhile, private foreign investors buy Treasuries seeking safety during the same periods.
Foreign Governments' Treasury Strategy
- Foreign governments recycle dollars into U.S. Treasuries to earn interest and fund their economies.
- Selling Treasuries happens when they face dollar shortages to support domestic businesses needing dollars.
Treasury Selling Signals Worsening Economy
- Treasury selling by foreign officials signals worsening global economic conditions and growing recession fears.
- Dollar shortages and risk aversion prompt official sector selling to aid local banks with dollar funding issues.