Japan and China Dump US Treasuries Before Trump’s Victory

The United States' two largest foreign creditors, Japan and China, have been selling off their holdings of US Treasuries in recent months, a trend that has accelerated since Donald Trump's victory in the presidential election.

The move is likely a response to Trump's campaign promises to reduce the US's trade deficit with both countries and to renegotiate trade deals that he believes are unfair to the United States.

The Trump administration has also proposed tax cuts and infrastructure spending that could lead to higher interest rates, making US Treasuries less attractive to investors. The shift in sentiment towards US Treasuries could have a negative impact on the US economy, as it could lead to higher borrowing costs for businesses and consumers. It could also put upward pressure on the US dollar, making US exports more expensive and less competitive on the global market.

The US Treasury market is the largest and most liquid in the world, and it is used by governments, businesses, and individuals to borrow and invest money. The US government issues Treasuries to finance its budget deficit, and they are considered to be one of the safest investments in the world. However, the recent selling by Japan and China has raised concerns about the future of the US Treasury market and the US economy.

China's holdings of US Treasuries have fallen by $128 billion since the end of 2016, to $1.17 trillion as of the end of September. Japan's holdings have fallen by $66 billion over the same period, to $1.09 trillion.

The decline in demand for US Treasuries has contributed to a rise in interest rates, which has made it more expensive for the US government to borrow money. The yield on the 10-year Treasury note has risen from 1.88% at the end of 2016 to 2.36% as of the end of September.

The Trump administration has said that it is committed to reducing the US's trade deficit with China and Japan. In a statement released in January, the Treasury Department said that the administration is "working to address the underlying causes of the trade deficit, including unfair trade practices and currency manipulation." The administration has also proposed a number of tax cuts and infrastructure spending that could lead to higher interest rates, making US Treasuries less attractive to investors.

The shift in sentiment towards US Treasuries could have a negative impact on the US economy, as it could lead to higher borrowing costs for businesses and consumers. It could also put upward pressure on the US dollar, making US exports more expensive and less competitive on the global market.