The tensions between the United States and China are heating up again and lo and behold, some market pundits start to bring out old arguments about the nuclear option available to China to sink the global economy. The argument goes somewhat like this: China owns $1tn of US government debt. If they want to sink the economy, all they have to do is sell all their Treasury holdings and send US Treasury yields through the roof. The result would be massive losses in the bond holdings of banks and other investors and the likely onset of a global financial crisis.
aaah finally!
Great insights Joachim. Can you please explain why Russia sold so much during the time you mentioned?