Friday, February 19, 2010

Jim Rogers: China Cutting Treasurys

China Treasurys

China bull Jim Rogers commented on the inevitable move by China to cut its holdings in U.S. Treasurys, saying the emerging economic giant will probably continue to do this for some time to come.

The appetite for Treasurys from foreign investors dropped by the largest amount in history in December, as concerns over the long-term viability of the U.S. dollar continues on.

Cuts by China resulted in Japan now being the largest holder of U.S. Treasurys, as China cut holdings by $34.2 billion to $755.4 billion. Japan holds $768.8 billion in Treasurys at this time.

Expectations are with foreign holding dropping from many different countries, the Federal Reserve may have to increase interest rates to attract investors, a highly difficult scenario when considering the extraordinary spending by the Obama administration and the resultant budget deficit as a consequence.

Rogers predicts this trend will continue once the fears over the euro are over, which he says could take some time.

China Treasurys

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