Bloomberg citing people familiar with the matter

  • China is evaluating potential impact of a gradual CNY depreciation
  • Senior Chinese officials are studying a two-pronged analysis of the yuan
  • First part looks at the effect of using the currency as a negotiation tool with the US
  • Second part looks at what would happen if China depreciates the yuan to offset any trade impact

As mentioned before, Treasuries are not going to be the route China takes when it comes to responding to the US on the trade front. It will be all about the yuan, and no surprises that they're already starting to consider it.

If anything, this feels more like a warning shot to the US.