Market shrugs as China slashes US debt stake by US$180b

New York

TO get a sense of how robust demand is for US Treasuries, consider that China has reduced its holdings by about US$180 billion and the market barely reacted.

Benchmark 10-year yields fell 0.6 percentage point even though the largest foreign holder of US debt pared its stake between March 2014 and May of this year, based on the most recent data available from the Treasury Department. That's not the doomsday scenario portrayed by those who said that the size of the holdings - which peaked at US$1.65 trillion in 2014 - would leave the US vulnerable to China's whims.