can someone explain how dumping the 750B of US bonds all at once drives up the interest rate?
However, if the Saudis panic or intentionally dump their entire holdings on the market at once in a revenge move, the bond market could crash, sending interest rates skyrocketing. According to JPMorgan, the amount of Treasuries that can now be sold in 2015 without affecting price is $80 million worth, down from $280 million in 2014. This may be due to China’s ongoing liquidation. Since the Chinese are no longer significant buyers, liquidity has dried up. The $80 million number is based on bond yield fluctuations on October 15, 2014, about four months after China became a net seller of Treasuries. On that one day, bond yields fluctuated 14% from highs to lows, something that had never happened before.
Read more: Can the US Treasury Market Absorb a $750 Billion Saudi Arabian Fire Sale? - 24/7 Wall St. http://247wallst.com/economy/2016/0...illion-saudi-arabian-fire-sale/#ixzz46ITusvbU
However, if the Saudis panic or intentionally dump their entire holdings on the market at once in a revenge move, the bond market could crash, sending interest rates skyrocketing. According to JPMorgan, the amount of Treasuries that can now be sold in 2015 without affecting price is $80 million worth, down from $280 million in 2014. This may be due to China’s ongoing liquidation. Since the Chinese are no longer significant buyers, liquidity has dried up. The $80 million number is based on bond yield fluctuations on October 15, 2014, about four months after China became a net seller of Treasuries. On that one day, bond yields fluctuated 14% from highs to lows, something that had never happened before.
Read more: Can the US Treasury Market Absorb a $750 Billion Saudi Arabian Fire Sale? - 24/7 Wall St. http://247wallst.com/economy/2016/0...illion-saudi-arabian-fire-sale/#ixzz46ITusvbU
