Central banks are selling US Treasuries at a time when almost everyone else is piling into them.
Monetary authorities outside the US cut their Treasuries held in custody at the US Federal Reserve to the lowest level in almost a year. Why? One theory starts with the record-setting rally in the US dollar. To protect their own foreign-exchange rates, central banks are selling some of their holdings, exchanging the US dollars and bringing the proceeds home.
“Developing countries face weaker currencies,” Tokyo-based SMBC Nikko Securities Inc senior market economist Hiroki Shimazu said. “They have to sell US dollars to buy their currencies.”
China and Russia are probably following this strategy to prevent exchange rates from fueling inflation in their nations and to keep investors from shifting money out of the countries, he added.
Benchmark 10-year yields were little changed at 2.12 percent as of 6:49am in London yesterday.
The Bloomberg Dollar Spot Index, which tracks the performance of the US dollar against 10 currencies, closed at a record high on Wednesday.
Foreign central banks, which are among the biggest buyers of US government bonds, cut their stakes held at the Fed to US$2.92 trillion, based on data from the US central bank released on Thursday. It was the lowest since March 26 last year.
Falling yuan positions at Chinese financial institutions suggest the central bank has intervened this year to curb yuan weakness as the currency traded near the limit of its permitted trading range, according to Barclays PLC.
The US’ largest foreign creditor, China, cut its holdings of US debt for the fourth consecutive month in December last year, based on the latest figures from the the US Department of the Treasury. Its stake of US$1.24 trillion was the smallest in almost two years.
The ruble has plunged 40 percent in the past 12 months, according to data compiled by Bloomberg.
The Bank of Russia reiterated last month that it might intervene in the currency market if needed, according to state-run news service RIA Novosti. Central banks intervene when they buy or sell currencies to influence exchange rates.
Russia cut its holdings of US debt by 20 percent in December last year, Treasury data show. Its stake amounted to US$86 billion, the lowest level since 2008.
Almost everyone else has been buying.
Treasuries have risen for four straight days through Thursday as investors seek higher yields than they can get in Europe or Japan. Ten-year notes yield 0.25 percent in Germany and 0.41 percent in Japan.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day