The truth is that when volatility spikes like this and there are unprecedented events, a lot of relationships break down.
So China selling US Treasuries could definitely be one big reason. But I think it is a mix of reasons all coming together.
Others are:
- Raising cash to meet margin calls
- Deleveraging because they are worried about more volatility
- Holding onto stocks and selling bonds instead
- The more complex issues are structured products and funds. There are quite a few funds that have structured trades that break down in times of high volatility. They create forced selling of bonds. These are basis trades, relative value trades, and risk parity trades.
@Taurisk may like this note from ancient economic history.
The Trump World Order has Black Sea, Hellenic, Roman, & Viking roots. US has reverted to the ancient Sea Armies' Imperial taxes tributa and vectigalia: Tribute (protection money & weapons & energy sales) and Market Tolls (tariffs).
US also wants the Imperial tax of portorium: Port & canal duties and ship levies (Panama Canal ports and $1.5 million on Chinese-built ship ownership). It's not often my 5 year detour into the 11th century helps me understand current events so clearly, but here we are. If you want to read 4,000 years of Sea Army conquests distilled to 1066, you might like my earlier book.
(Order from Amazon local to you for best price and shipping.) Carmen Widonis - The First History of the Norman Conquest has my original transcription and translation from the Latin, with a cracking account of the Battle of Hastings and a new interpretation of the 1066 Siege of London. https://x.com/Kathleen_Tyson_/status/1909651850665541878
