Global central banks have sold $81.5 billion in U.S. Treasuries, reducing holdings to the lowest level since 2012. Powell hints at keeping interest rates unchanged.

Ask AI: When oil-importing countries sell US Treasuries to replenish liquidity, what economic risks does it reflect?

According to a report by Caixin Global, since the outbreak of the Iran war, central banks around the world have sold USD 81.5 billion worth of US Treasuries. As of March 25, the total amount of US Treasuries held and custodied by global central banks and other official institutions at the Federal Reserve Bank of New York fell to USD 2.69 trillion, the lowest level since April 2012. This is a clear decline from USD 2.78 trillion as of February 25, and the total holdings have been decreasing for six consecutive weeks.

Middle Eastern oil-exporting countries, which hold about USD 300 billion in US Treasuries, may have contributed to the decline in these US Treasuries holdings. At the same time, oil-importing countries such as Turkey, India, and Thailand are accelerating the liquidation of US Treasuries to replenish liquidity because they need to pay for the high oil prices in US dollars, along with shrinking foreign exchange reserves and a growing need for intervention in currency markets. Brad Setser, a senior fellow at the Council on Foreign Relations, noted that since February 27, the Turkish central bank has sold USD 22 billion in foreign government bonds, with a substantial portion being US Treasuries.

Earlier, due to inflation concerns triggered by conflicts in the Middle East, the US Treasuries market faced the most severe monthly selling since October 2024. Yields on 2-year and 5-year US Treasuries had jumped by more than 50 basis points, and yields on 30-year US Treasuries at one point nearly touched 5%.

According to Caixin Global, on March 30, Federal Reserve Chair Jerome Powell said that the Fed could temporarily ignore the impact of oil prices and was inclined to keep interest rates unchanged. This eased market concerns that the Fed would be forced to raise rates and pushed the bond market to rebound further. Institutions such as Pacific Investment Management Company believe that the core narrative behind the current bond market selloff is gradually shifting toward an economic growth shock. There is room for US Treasury yields to fall further later, and the current high yields have value for positioning.

Statement: The market involves risk; investing requires caution. This article is generated by AI based on third-party data for reference only and does not constitute personal investment advice.