Mnuchin's Treasury Is Tested by China's Bond Policy Signals

No alarm inside Treasury yet over any possible China shift
China officials said to advise slowing, halting U.S. debt buys

Bank of America Merrill Lynch’s Mark Cabana duscusses how bond investors are reacting to China-related headlines. (Source: Bloomberg)

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By Saleha Mohsin

January 10, 2018 at 8:41 PM UTC

Updated on

January 11, 2018 at 5:44 AM UTC

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China’s hints that it may slow purchases of U.S. government debt gave Treasury Secretary Steve Mnuchin and his team a test run on debt-market shocks.

The episode, prompted by a Bloomberg News report that sent 10-year Treasury yields to their highest level in 10 months before recovering, highlights a staffing gap in the Office of Domestic Finance that predates Mnuchin. That’s the arm of the department that would deal with a disruption in debt markets that any major shift in Chinese policy could precipitate.