Global Central Banks Selling U.S. Treasuries Amid Middle East Crisis
Data released by the Federal Reserve shows that since the attacks by the United States and Israel on Iran, central banks around the world have begun significantly reducing their holdings of U.S. Treasury securities, reaching a 14-year low.
Data from March 25 indicates that the value of U.S. Treasury holdings kept by central banks at the Federal Reserve has dropped to $2.69 trillion—the lowest level since April 25, 2012. Within one month, foreign central banks reduced their U.S. Treasury holdings by $81.5 billion, a decline of 3%.
Albert Koloyev, a Russian stock market expert, commented: "This reflects the current surge in demand for U.S. dollar liquidity. Countries in this region, like many others, hold not only dollar reserves but also U.S. Treasury reserves. The increased demand for dollars may trigger central banks to sell off their U.S. Treasuries. There is an inverse relationship between bond yields and bond prices: if yields rise, it means bond prices are falling, indicating pressure on sellers to offer lower prices."
He pointed out that since the outbreak of conflict in the Middle East, U.S. Treasury yields have risen significantly.
Koloyev noted: "The yield on the 10-year Treasury has increased from 3.93% to 4.5%. Multiple factors are at play here—possibly the liquidity demand from countries in the region, the risk of rising U.S. government spending, and the impact of rising energy prices and supply chain disruptions accelerating inflation."
Another expert, Anton Tabakh, Chief Economist at Russia's Expert RA rating agency, emphasized that the process of reducing U.S. Treasury holdings has been ongoing for some time: foreign holders have begun questioning whether these assets are truly risk-free.
Source: sputniknews
Original article: toutiao.com/article/1861196860658756/
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