"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Thursday, September 06, 2007

Is China moving the market with Treasury Bond sell off and dumping sub prime CDO's ?????

The Daily Telegraph reports today that Data released by the New York Federal Reserve shows that foreign central banks have cut their stash of US Treasuries by $48bn since late July, with falls of $32bn in the last two weeks alone.The yield on the benchmark 10-year note declined to 4.47 % at 5:15 p.m. in New York, from 4.55 % yesterday.

A recent analyst report has pointed the finger at Beijing as the main suspect in the sudden bond flight this summer.

In a client note entitled "Has China started to dump US Treasuries?", David Powell, an economist at IDEAglobal in New York said the sales appear to coincide with early moves by Beijing to launch its new $300bn sovereign wealth fund.

The scheme is part of the government's plan to diversify it $1,340bn reserves from bonds (mostly in the US) to a broader portfolio of investments and a better yield.

See also Lord Patel's recent observations about the US$3 Bn. Blackstone investment by China and the sub-prime mortgage derivatives / CDO's sell off. "Did China trigger Market Meltdown ?" on Sunday August 19th 2007.

The Dow Jones industrial average was down 173.71 points, or 1.29 percent, at 13,275.15. The Standard & Poor's 500 Index was down 19.49 points, or 1.31 percent, at 1,469.93. The Nasdaq Composite Index was down 27.94 points, or 1.06 percent, at 2,602.30.

Apple was down 4.3 percent at $137.88 after the company said it was cutting the price of its iPhone.

Earlier in the day, reports showed a plunge in pending U.S. home sales,The National Association of Realtors' index of signed purchase agreements dropped 12.2 % after gaining 5 % in June. Today's report showed pending resales dropped in all four regions. They fell 21% in the West, 13 % in the Midwest, 12 % in the Northeast and 6.6 % in the South.

Private sector employment showed slowest rise (38,000 )in four years and a surge in layoffs, especially in the financial services sector.

Charts all from the Federal Reserve Bank website today.

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