00:00China's regulators are said to have urged the country's banks to curb the U.S. Treasury's exposure, citing risks around concentration and market volatility.
00:11Sources close to the matter have told Bloomberg News that officials have advised financial institutions to limit the buying of U.S. government bonds.
00:19They also told those with high exposure to pare down their positions.
00:24So, why is this a big deal?
00:26The guidance suggests growing wariness among Chinese officials that large holdings of U.S. government debt may expose banks to sharp swings in markets.
00:38Treasuries have been a catalyst of bond market swings since Donald Trump became U.S. president again, as his trade, government spending plans, attacks on Federal Reserve independence and geopolitical policies influence traders' sentiment.
00:54More broadly, there's also been debate about the safe haven status of U.S. treasuries and the appeal of the dollar as the world's reserve currency.
01:04Gold prices, for instance, have skyrocketed as some investors sought to diversify from dollar assets.
01:11All this matters because if there's any hint of large selling of treasuries, it could push yields sharply higher and make borrowing costs more expensive in the U.S.
01:21And who are some of the biggest overseas investors in treasuries?
01:25Japan with $1.2 trillion, the U.K. with about $890 billion, and China which owns about $680 billion.
01:33Now, it's important to note that this latest China advice does not apply to state holdings of U.S. treasuries.
01:39China also isn't alone in this either, with India and other emerging markets also considering their treasuries holdings.
01:46So, where to from here?
01:48Keep a close eye on foreigners' holdings of treasuries and what they mean for the world's biggest bond market.
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