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Investing.com -- There is speculation from several well-placed investors that China is dumping U.S. Treasuries, possibly in retaliation to the U.S. tariffs.  The chatter comes just hours ahead of Trump’s massive 104% tariff set to hit Beijing at midnight.

One such source is venture capitalist and Trump supporter Chamath Palihapitiya. Palihapitiya said Tuesday afternoon that he is hearing from people that China has been dumping U.S. Treasuries in an effort to move yields up and shift the narrative.

“I’m hearing they are dumping UST to try and move rates to shift narrative and make our upcoming Treasury auctions more expensive,” Palihapitiya commented on X. “May make sense to delay auctions to next week. China can’t sell indefinitely.”

Today, the U.S. 5-year treasury rose 2% to 3.918%, the 10-year rose 3.2% to 4.291%, and the 30-year rose 3.6% to 4.762%.

China held $761 billion in U.S. treasuries as of the end of January, the second largest foreign holder behind Japan at $1.08 trillion.

 

Trump and Treasury Secretary Scott Bessent have continuously pointed to lower yields as a rare win during the recent market carnage. In fact, some even believe the recent tarrif action could be part of a plan by the Trump administration to lower yields with trillions in government debt that will either mature or need to be refinanced in 2025. In addition, lower yields point to lower mortgage payments and lower car payments, potentially stimulating the economy.

As treasury yields rose today, stocks saw a massive reversal.  The S&P 500 closed down 79 points, or 1.57%, after trading up 4% earlier in the session.

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