SHIFT ALERT: The 🇬🇧 UK has leap-frogged 🇨🇳 China to become the #2 largest foreign holder of US Treasuries.
But what’s really happening?
The Bank of England isn't on a buying binge. Rather it's global banks, insurers, custodians and hedge-fund “basis traders” booking positions through the City.
China’s been drip-selling Treasuries for a decade, rotating into agencies, gold and crucially, shorter-dated bills to keep its options open.
Some PRC cash is simply moving “off-camera” via Euroclear/Clearstream, making the UK’s ledger look fatter.
Why it matters:
1️⃣ The foreign share of the $27 trillion US Treasury market keeps shrinking, raising Washington’s sensitivity to ratings downgrades and home-grown demand shocks.
2️⃣ A thinner Chinese bid can nudge yields higher just as the Fed flirts with cuts.
3️⃣ For the City, it’s a post-Brexit branding win: London remains the balance sheet for global dollar flow.
What to watch next:
May TIC data... does the gap widen?
Leverage in UK “basis trades” after 2022’s LDI scare.
China’s record gold imports.
👇 Your thoughts?
Music: Slushy by Cushy-2, Epidemic Sounds
#BondMarket #Macro #Investing #London #China #USTreasuries
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