One dangerous card that China’s got is its $760 billion holdings in Treasury securities. The country is the US’s second-largest foreign creditor after Japan.
Last week, the 10-year yield jumped by 50 basis points to 4.49%, the biggest weekly surge since 2001. Some of the sharpest moves were occurring during Asian hours, prompting speculation that Beijing was in the market. Will China weaponize and dump its holdings?
Treasury Secretary Scott Bessent brushed this fear aside. In a recent interview with Tucker Carlson, he talked about the beauty of being the world’s biggest borrower. “If you take a bank loan, the bank is in charge, they can repossess whatever you borrowed against. But if you take a big enough loan, you’re kind of in charge of the bank,” he said.
While that’s true in a distressed scenario, the dynamic doesn’t quite work here. Trump’s abrupt tariff U-turn exposed the White House’s Achilles’ heel: He blinked and paused hikes on all nations except China — after watching US sovereign bonds tank.
After all, Bessent, who’s now spearheading tariff negotiations, requires a stable bond market to sell into….
“One dangerous card that China’s got is its $760 billion holdings in Treasury securities. The country is the US’s second-largest foreign creditor after Japan.”https://t.co/xiuAsrNHxb
— Tim O'Brien (@TimOBrien) April 14, 2025