Foreign central banks sell Treasuries. Chinese govt bonds emerge as lone haven.

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Foreign central banks sell Treasuries

Foreign central banks have slashed their holdings of Treasuries at the New York Federal Reserve to the lowest level since 2012, as countries sell the US government bonds to prop up their economies and currencies in the wake of the Iran war.
The value of Treasuries held in custody at the New York Fed by official institutions — a group that is largely made up of central banks but also includes governments and international institutions — has dropped by $82bn since February 25 to $2.7tn, according to Fed data.
The decline in these holdings since the war began a month ago highlights how the surge in energy prices triggered by Iran’s closure of the Strait of Hormuz, a vital waterway, has upended the finances of countries that rely on oil imports, as well as boosting the dollar across the board.

Chinese govt bonds emerge as lone haven

BEIJING, March 26 (Xinhua) — As a sweeping sell-off gripped global bond markets recently and rattled investor sentiment over rising energy prices and inflation expectations, China’s bond market has remained notably stable, underscoring its emerging role as a resilient haven.

The sell-off in the backdrop of recent geopolitical tensions has sent bond yields sharply higher across advanced economies, including the United States. The selling pressure sent the 10-year U.S. Treasury yield to its highest level in nearly eight months early this week, touching 4.4055 percent on Monday.

The sell-off also hit bond markets of other developed economies. In Britain, the yield on the benchmark government bond once hit a 52-week high last Thursday, along with yield rises in Australia and New Zealand.

The bout of bond volatility in U.S. Treasuries, typically seen as a haven during market turmoil, has highlighted a shifting market dynamic, according to market analysts and investment strategists.