Treasury Secretary Scott Bessent, a financial professional, significantly contributed to calming the US bond market.
In a Bloomberg TV interview on April 14, he reiterated his view that the decline was primarily due to deleveraging, adding that he didn’t think “there’s a dumping” by foreign investors, and stated, “I have no evidence that it’s sovereigns” behind the drop.
He then declared, “We could up the buybacks if we wanted.”
As mentioned last week, there were irresponsible speculations suggesting Japanese financial institutions’ selling of US Treasuries led to the Trump administration’s tariff pause, but this has already been refuted, not only by comments from the institution in question but also by data.
According to the “International Transactions in Securities” weekly data released by Japan’s Ministry of Finance on April 17, Japanese institutions’ net selling of foreign long-term debt securities for April 6-12 was 512 billion yen, marking the sixth consecutive week of net selling, but significantly reduced from 2.5699 trillion yen during March 30-April 5 (coinciding with fiscal year-end).
Interestingly, on April 18, Bloomberg published an article titled “Deutsche Bank Sees China Clients Eye Shift to Europe From US.”
In the article, the bank’s head of China macro and global emerging market sales stated, “We have observed some diversification away from US dollar in Chinese investors’ portfolios,” indicating European high-quality bonds, Japanese government bonds, and gold as potential alternatives to Treasuries.
Typically, financial institutions do not publicly discuss client flows, suggesting this might indirectly signal that Chinese investors’ sales of US Treasuries are part of private diversification efforts.
