4 ms·

I am not familiar with Treasuries, I'd appreciate some insight into what this means "China has been a less aggressive buyer of the U.S. sovereign debt". How is

I am not familiar with Treasuries, I'd appreciate some insight into what this means "China has been a less aggressive buyer of the U.S. sovereign debt". How is it possible to "hold" (buy) another country's debt?

thoughtstheseus 7y ago
The U.S. govt. holds a sale of treasuries every so often and people/entities buy them. Nothing special about it. They're high quality and liquid assets so they can be frequently found in many investment portoflios and balance sheets (essentially as good as cash).
codesushi42 7y ago
"China has been a less aggressive buyer of the U.S. sovereign debt" It means China is dumping US debt. Which will mean a surge in interest rates, a weaker US dollar, and in a nightmare scenario, hyperinflation.
- _0ffh 7y ago
  > It means China is dumping US debt. Which will mean a surge in interest rates, a weaker US dollar, and in a nightmare scenario, hyperinflation. But then again, the popular wisdom seems to be that a weak currency supports exports. So I don't know that this is clearly a bad thing. Hyperinflation I would peg to be usually caused by a break down of the domestic market.
  - wolco 7y ago
    A weak currency means more exports but higher import prices. Add the additional tariff coming soon means anything from China will get more expensive. Perhaps this forces Trump to drop them.. it could backfire and create a local industry that will compete against China.
    - whatshisface 7y ago
      If you believe Trump, then the creation of a tarrif-protected local industry would constitute "front-firing."
- ChrisLomont 7y ago
  The article states China’s holdings are still increasing, the opposite of dumping. Japan is simply increasing faster.
- b_tterc_p 7y ago
  Wouldn’t that deeply hurt the Chinese economy as their boost from their currency inflation goes away
rolltiide 7y ago
Free markets mean any market participant can buy anything. Just like you log on to Robinhood and buy stocks or bonds, one of those users is the Government of Japan. This is really only slightly simplified as they wouldn't use Robinhood, but they could. Convenience improvements work for all market participants. Synonyms to save you time understanding this market: Government bonds = sovereign debt = (when US federal bonds are the context) US treasuries aka US treasury bonds Fixed income = the market of bonds = credit markets Junk = not "investment grade" bonds = high yield, but doesn't mean "junk, bad investments"
geofft 7y ago
Not an expert, but I believe it means that the country owes you money, to be paid back on some schedule, and in particular you can re-sell the object-that-says-you're-owed-money to other people and therefore there is a market value for it. It's like holding a mortgage - if I get a mortgage on a house, I owe the value of the mortgage to my bank, but only slowly. My bank can then resell the mortgage to another bank, who becomes the holder of the mortgage. They're owed money by me, which is good if they think I'm creditworthy and the interest rate on the mortgage is profitable for them, and bad if not. You might want to sell a debt to someone else if you want some fixed amount of money now instead of a greater, probably riskier amount of money in the future.
basementcat 7y ago
You can point your browser to treasurydirect.gov sign up and transfer some funds and hold your own little piece of USA government debt!
patio11 7y ago
I'll give you the geek-friendly oversimplified version: The U.S. government issues several varieties of securities, informally referred to as "Treasuries." Substantially anyone can own one; you can buy one directly from the US yourself (treasurydirect.com) or from any of a host of financial institutions, which both hold them for their own account and resell them routinely. Because the US is so central to the international economy and so good a credit risk, there is an active market and infrastructure for holding Treasuries substantially everywhere. How good credit is the US government? Well, for a variety of purposes it is useful to have the notion of a "risk-free rate of return", and whatever the US is paying on treasuries is assumed to be that rate. (This is assumed to be risk-free because the US knows that default on treasuries would be cataclysmic and would do anything to stop it, and one of their options is creating more money and using it to repay treasuries as they come do, which has consequences but is not a default.) Governments routinely hold debt securities of each other. This gets complicated, because the thing you think of as "the Japanese government" is both a) distinct from other things you might think of when you think of Japan and b) actually comprised of thousands of units that could in principle beneficially own a treasury, but the overwhelmingly most likely one by dollar weighting is the Bank of Japan as opposed to e.g. Ogaki City Hall (which could purchase a treasury on any Tuesday from anyone presently owning them, which includes every financial institution Ogaki City Hall has an account with). The Bank of Japan does not purchase most of its Treasuries on the secondary market; they get originally issued Treasuries at auction. The Treasury runs auctions regularly: https://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Documents/auctions.pdf https://www.treasury.gov/resource-center/data-chart-center/q... Governments and very large financial institutions, the kind which make transactions denominated in billions of dollars, participate in the auction; the Treasury awards the newly created securities to the bidders with the most competitive (cheapest for the US) bids. After the securities are issued and released onto the market via the auction, they are tradeable. The secondary market (technically, MANY secondary markets) for treasuries is the most liquid market for any security in the world. Large institutions, small institutions, etc etc buy and sell billions all day every day. As it gets farther from J.P. Morgan Chase and closer to e.g. individual HNers, it is more likely that a retail investor is purchasing a Treasury either not-terribly-competitively from whomever they hold an account with and/or they're purchasing financial services from an intermediary who owns a lot of treasuries themselves either directly on the behalf of their account holders or indirectly. For example, a mutual fund could easily have hundreds of millions (all beneficially owned by fund holders), or a bank might be paying interest on their checking accounts while keeping a substantial amount of treasuries on the bank's own account. (The checking account holder doesn't have direct exposure to the treasuries.) Make sense?

thoughtstheseus 7y ago

The U.S. govt. holds a sale of treasuries every so often and people/entities buy them. Nothing special about it. They're high quality and liquid assets so they can be frequently found in many investment portoflios and balance sheets (essentially as good as cash).

codesushi42 7y ago

"China has been a less aggressive buyer of the U.S. sovereign debt" It means China is dumping US debt. Which will mean a surge in interest rates, a weaker US dollar, and in a nightmare scenario, hyperinflation.

_0ffh 7y ago
> It means China is dumping US debt. Which will mean a surge in interest rates, a weaker US dollar, and in a nightmare scenario, hyperinflation. But then again, the popular wisdom seems to be that a weak currency supports exports. So I don't know that this is clearly a bad thing. Hyperinflation I would peg to be usually caused by a break down of the domestic market.
- wolco 7y ago
  A weak currency means more exports but higher import prices. Add the additional tariff coming soon means anything from China will get more expensive. Perhaps this forces Trump to drop them.. it could backfire and create a local industry that will compete against China.
  - whatshisface 7y ago
    If you believe Trump, then the creation of a tarrif-protected local industry would constitute "front-firing."
ChrisLomont 7y ago
The article states China’s holdings are still increasing, the opposite of dumping. Japan is simply increasing faster.
b_tterc_p 7y ago
Wouldn’t that deeply hurt the Chinese economy as their boost from their currency inflation goes away

rolltiide 7y ago

Free markets mean any market participant can buy anything. Just like you log on to Robinhood and buy stocks or bonds, one of those users is the Government of Japan. This is really only slightly simplified as they wouldn't use Robinhood, but they could. Convenience improvements work for all market participants. Synonyms to save you time understanding this market: Government bonds = sovereign debt = (when US federal bonds are the context) US treasuries aka US treasury bonds Fixed income = the market of bonds = credit markets Junk = not "investment grade" bonds = high yield, but doesn't mean "junk, bad investments"

geofft 7y ago

Not an expert, but I believe it means that the country owes you money, to be paid back on some schedule, and in particular you can re-sell the object-that-says-you're-owed-money to other people and therefore there is a market value for it. It's like holding a mortgage - if I get a mortgage on a house, I owe the value of the mortgage to my bank, but only slowly. My bank can then resell the mortgage to another bank, who becomes the holder of the mortgage. They're owed money by me, which is good if they think I'm creditworthy and the interest rate on the mortgage is profitable for them, and bad if not. You might want to sell a debt to someone else if you want some fixed amount of money now instead of a greater, probably riskier amount of money in the future.

basementcat 7y ago

You can point your browser to treasurydirect.gov sign up and transfer some funds and hold your own little piece of USA government debt!

patio11 7y ago

I'll give you the geek-friendly oversimplified version: The U.S. government issues several varieties of securities, informally referred to as "Treasuries." Substantially anyone can own one; you can buy one directly from the US yourself (treasurydirect.com) or from any of a host of financial institutions, which both hold them for their own account and resell them routinely. Because the US is so central to the international economy and so good a credit risk, there is an active market and infrastructure for holding Treasuries substantially everywhere. How good credit is the US government? Well, for a variety of purposes it is useful to have the notion of a "risk-free rate of return", and whatever the US is paying on treasuries is assumed to be that rate. (This is assumed to be risk-free because the US knows that default on treasuries would be cataclysmic and would do anything to stop it, and one of their options is creating more money and using it to repay treasuries as they come do, which has consequences but is not a default.) Governments routinely hold debt securities of each other. This gets complicated, because the thing you think of as "the Japanese government" is both a) distinct from other things you might think of when you think of Japan and b) actually comprised of thousands of units that could in principle beneficially own a treasury, but the overwhelmingly most likely one by dollar weighting is the Bank of Japan as opposed to e.g. Ogaki City Hall (which could purchase a treasury on any Tuesday from anyone presently owning them, which includes every financial institution Ogaki City Hall has an account with). The Bank of Japan does not purchase most of its Treasuries on the secondary market; they get originally issued Treasuries at auction. The Treasury runs auctions regularly: https://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Documents/auctions.pdf https://www.treasury.gov/resource-center/data-chart-center/q... Governments and very large financial institutions, the kind which make transactions denominated in billions of dollars, participate in the auction; the Treasury awards the newly created securities to the bidders with the most competitive (cheapest for the US) bids. After the securities are issued and released onto the market via the auction, they are tradeable. The secondary market (technically, MANY secondary markets) for treasuries is the most liquid market for any security in the world. Large institutions, small institutions, etc etc buy and sell billions all day every day. As it gets farther from J.P. Morgan Chase and closer to e.g. individual HNers, it is more likely that a retail investor is purchasing a Treasury either not-terribly-competitively from whomever they hold an account with and/or they're purchasing financial services from an intermediary who owns a lot of treasuries themselves either directly on the behalf of their account holders or indirectly. For example, a mutual fund could easily have hundreds of millions (all beneficially owned by fund holders), or a bank might be paying interest on their checking accounts while keeping a substantial amount of treasuries on the bank's own account. (The checking account holder doesn't have direct exposure to the treasuries.) Make sense?