China unlikely to weaponize US Treasuries, as it would weaken its own economy
From Yahoo Finance: 2025-04-16 07:08:00
Treasury Secretary Scott Bessent reassures that China selling U.S. Treasuries wouldn’t destabilize financial markets, as it would weaken their economy by strengthening their currency. Bessent emphasizes the lack of purpose for China to “weaponize” Treasuries due to the impact on their own economy.
China’s export-oriented economy benefits from a weaker currency, making exports more competitive globally by lowering costs. Bessent expresses confidence in the government and Federal Reserve’s ability to handle any potential selling of U.S. Treasuries by China, emphasizing the tools available to address such situations.
Analysts link the recent pause in trade implementation to turbulence in bond markets, with Kathy Jones highlighting the divergence between the U.S. dollar and interest rates as a sign of foreign selling of Treasuries. President Trump’s tariff pause is seen as a response to bond market chaos and rising treasury yields.
The U.S. increased tariffs on China by 245%, leading to market declines with the Dow, S&P 500, and Nasdaq 100 all below their record highs. ETFs tracking these indices were lower in premarket trading, reflecting market volatility and uncertainty following the tariff increase.