BRICS Nations Unload US Treasuries
China, Brazil, and Saudi Arabia, all members of the BRICS group, have quietly reduced their holdings of US Treasury securities. According to recent data from the US Treasury Department, China’s ownership of Treasury securities dropped by $13.6 billion in July. Brazil also pared its holdings by $2.7 billion during the same period, while Saudi Arabia reduced its holdings by $1.1 billion. India and the United Arab Emirates, both BRICS members, also saw a decrease in their treasury holdings.
Possible Reasons for Sell-Off
Adam Kobeissi, founder and editor-in-chief of The Kobeissi Letter, believes that the aggressive sell-off by China could be due to a potential slowdown in their economy or part of a broader strategic shift. The sell-off comes amidst a bond market sell-off and rising Treasury yields, which has caused financial chaos in recent days and weeks.
Financial Market Reaction
A stronger than expected jobs report on Friday further fueled the sell-off, with yields on 10-year and 30-year Treasuries reaching new highs. According to CME’s FedWatch tracker, the majority of investors believe that the Federal Reserve will keep interest rates unchanged next month.
Hot Take: BRICS Nations Reduce US Treasury Holdings
China, Brazil, and Saudi Arabia have joined the trend of reducing their holdings of US Treasury securities. This move could be driven by factors such as a potential economic slowdown or a broader strategic shift. The sell-off comes amid a bond market sell-off and rising Treasury yields, causing financial chaos. The majority of investors believe that the Federal Reserve will keep interest rates unchanged next month. This trend highlights the shifting dynamics in global finance and raises questions about the future of the US dollar as a reserve currency.
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