There has been increasing speculation in the mainline press over the last 2 weeks about China’s selling of US Treasuries. The talk is that China is both worried about the level of it’s holdings and is upset with the US over Taiwan and Tibet. Chinese newspapers have been congratulating the government on its actions (but remember that the government runs many of the newspapers).
The market has been able to absorb any Chinese selling plus all new issues but this is a situation which cannot last overly long. The market is getting nervous. Don’t forget that this fear runs through the market probably once a year, has done for the last 15 years, and has always proved ill-founded. Nevertheless…
