US Treasuries Or Hot Potatoes? Two

Investment prospects need caution

although US Treasury bonds The market has a unique position and a low probability of default, but it is not a permanent solution to invest heavily in it. China now faces many risks as its top creditor.

Zhang Ming, a researcher at the international financial research center of the Institute of world economics and politics of the Chinese Academy of Social Sciences, pointed out that China's potential capital losses on external reserves include two categories. The first is the decline in the market value of foreign exchange reserve assets. For example, the rise in the yield curve of treasury bonds will result in a decline in the market value of treasury bonds, which will bring capital losses to creditors. The second category is capital loss caused by the depreciation of foreign currency against the local currency, that is, capital loss caused by exchange rate changes.

"Inflation, market returns and other factors will result in holding. US Treasury bonds Risks. " Chen Daofu, director of the comprehensive research office of the Financial Research Institute of the State Council Development Research Center, also said.

Inflation rate and benchmark interest rate are important indicators that affect the price of treasury bonds. Among them, long-term treasury bonds are more sensitive to inflation, while short-term treasury bonds are more sensitive to interest rate policies.

Ding Zhijie, Dean of the school of finance at the University of foreign trade and economics, believes that the current global loose monetary policy will bring a lot of liquidity to future inflation. Although not seen in a year, this is a problem that must be faced in the next three to five years. Due to inflation, the purchasing power of the US dollar has declined, and any assets priced in US dollars will face losses.

In addition, for the Central Bank of China, US Treasury bonds There is a more realistic cost.

Zhang Ming pointed out that the accumulation of foreign exchange reserves of the central bank will lead to an increase in foreign exchange reserves. In order to prevent the impact of increasing foreign exchange on the domestic base currency, the central bank usually uses the way of issuing central bank to cancel the transaction, while the central bank has interest cost. This means that if the yield of treasury bonds held by the central bank is lower than the yield of the same period, the central bank will face losses, and vice versa.

According to statistics, most of the time since 2005, the yield of the central bank is lower than that of the US Treasury bonds in the same period, which means that the central bank is profitable in this respect. However, in the two periods of 2008 and the second half of 2009, the yield of the central bank is higher than that of the US Treasury bonds in the same period, which means that the central bank has a real deficit in holding US Treasury bonds.