UBS: China can gradually reduce its holdings of US Treasuries and its reliance on the dollar

The dollar structure is weakening "China's modest gradual reduction of US Treasuries should be a trend.　　"UBS managing director, wealth Management Research Department Asia Pacific Head and Asia Pacific chief investment strategist Puyong 29th to our correspondent said that China could not sell a large number of U.S. Treasury bonds, which is not good for anyone, but to reduce the reliance on the U.S. dollar, can be a small gradual reduction of U.S. debt. In late April this year, the balance of US Treasury bonds held by the mainland was $763.5 billion trillion, the first decline in 11 months, according to US Treasury statistics released June 15 by the U.S. Department of Finance. "The US is issuing too much debt and the dollar is likely to weaken further, which is structural," he said. China's foreign trade exports remain under great pressure. This may also be part of the reason why China is gradually reducing its holdings of US Treasuries.　　"Puyong said. Andreas Hoefert, chief economist at UBS Wealth Management and UBS, reckons the U.S. fiscal deficit for 2009 and 2010 will be 10% to 15% of GDP. "The reason America has slowed recovered from the credit crunch is because of the unprecedented scale of stimulus." Since then, U.S. currency issuance has increased by more than a year, and government bonds have grown like a snowball.　　"Andreas Hoefert said. In addition, UBS strategist Thomas Flury said the dollar would face structural risks. As the economy recovers, market participants will be increasingly concerned about where the money for stimulus measures comes from, a problem that will create structural pressure on the dollar. The US will maintain low interest rates for a long time, so the dollar's yield will remain low.　　In addition, the recent trend in the foreign exchange market is mainly driven by an upturn in sentiment and a debate over the dollar's status as a reserve currency, which will put pressure on the dollar and will remain a major theme for the second half. Corporate bond Performance "so far this year, corporate bonds have been performing beyond government bonds.　　Puyong told the newspaper reporter. According to his analysis, last year, the credit market "paralysis", people flocked to government bonds to hedge, but so far this year has been reversed. Corporate bonds are on a comeback, and government bond prices are lower.　　Credit spreads, the difference in yields between corporate bonds and government bonds, have narrowed sharply, making corporate bonds outperform government bonds in the first half of the year. "Even so, credit spreads are still high in the long run, reflecting a pessimistic view of the outlook for Bond defaults, as investors demand higher risk premiums and the likelihood that corporate debt will continue to excel."　　"Puyong said. "Compared with corporate bonds, government bonds, the rise in the government's fiscal deficit, the United States and Britain and other developed countries will be saddled with more heavy government debt, making people more worried about the outlook for these countries."　　UBS strategist Bernhard Obenhuber said. Puyong said the overall credit spreads are too high, which may also be adjusted, so credit spreads will fall further, but corporate bonds will still outperformGovernment bonds.