So the general thinking is 10 yr treasury bonds reflect the economies consensus around what the long term interest rate is. Another general consensus in economi

So the general thinking is 10 yr treasury bonds reflect the economies consensus around what the long term interest rate is. Another general consensus in economics is that the interest rate is determined by the supply and demand for loan-able funds. Therefore if China sells so many bonds it increases the interest rate on 10yr T-Bonds. It has either shifted the long term interest rate in the U.S. by reducing the supply of loan-able funds or it created an enormous persistent arbitrage opportunity in T-Bonds.[0] Both of these seem very unlikely to me. 40 billion a month is just too small to make a difference.