Chinese investors dump record amount of US stocks and bonds

CHINESE investors dumped a record amount of US securities, both stocks and bonds, in May as diplomatic tensions remained elevated between the world’s largest economies.

Funds in the Asian nation offloaded a net US$42.6 billion worth of long-term securities consisting of Treasury, agency and corporate bonds as well as equities, according to the latest data from the US Department of the Treasury released on Thursday. Sales in the first five months of this year totaled US$79.7 billion, an all-time high for the January-May period.

More than half of the sales were of Treasuries, followed by agency debt and stocks. The yield on the benchmark Treasury 10-year note climbed to the highest since November on April 25.

China is one of the largest foreign holders of Treasuries and their flows are closely watched by bond investors and geopolitical strategists alike.

A rise in Sino-American tensions has often fueled speculation that Beijing may shift its foreign reserves out of US assets — a move that would likely add upward pressure to yields. BLOOMBERG