The central bank of our country just released the operation data of the bond market the day before yesterday.

By the end of May, the total amount of Renminbi bonds held by overseas institutions was 3.25 trillion yuan.

However, this figure was 3.5 trillion yuan at the end of last year, which means that Renminbi bonds were sold off by overseas institutions by as much as 250 billion yuan in 2023.

In the latest data, our country has just sold off 400 million US dollars of US Treasury bonds, and it is unexpected that we immediately see overseas institutions selling off Renminbi bonds by 250 billion yuan.

Why is that?

Some friends believe that the yield of our national debt is only less than 3%, while the yield of US debt is close to 4%, and even the yield of short-term US debt has reached more than 5%.

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Under such circumstances, funds will naturally sell off Renminbi bonds and buy US debt.

In fact, the yield of bonds and the yield of deposits are different.

The higher the deposit yield, the better, but the higher the bond yield, the higher the risk.

The lower the yield of the issued bonds, the better the credit of the issuer.

Even if the interest rate is low, everyone is willing to buy.

So the high yield of US debt now is not a good thing.

In fact, before 2021, the yield of US debt did not exceed 1.5%, and it became the target of countries' scramble.

Now the yield of US debt is more than 4%, and it has become the target of central banks to sell off.

This is enough to show that the higher the yield, the lower the value of the bond.

It is reasonable to say that the United States should have learned a lesson after this crisis and be cautious about the amount of Treasury bonds issued.

But the United States is now preparing to issue Treasury bonds again, and it is said that the amount is huge.

The US Treasury has released the news that it will increase the issuance of Treasury bonds in the second half of this year, and the preliminary plan is to focus on short-term products, including cash management bills and short-term Treasury bills.

The US Treasury did not disclose the specific number of issuance, but the Wall Street giant JPMorgan Chase broke the news that the United States is preparing to issue a staggering figure of 110 billion US dollars in Treasury bonds!

This will undoubtedly increase the supply in the US debt market and further lower the price of US debt.

So not only has China just sold off 400 million US dollars of US debt, but the United Kingdom has also sold off more than 30 billion US dollars.

Is the sale of Renminbi bonds a long-term trend?

The above text has already said that compared with the beginning of the year, the amount of Renminbi bonds held by overseas institutions has indeed decreased by 250 billion yuan.

However, we also need to pay attention to another data, that is, the month-on-month data.

Compared with April, the amount of bonds held by foreign institutions in the interbank market has slightly increased, from 3.17 trillion yuan last month to 3.19 trillion yuan in May.

This should be a clear signal that foreign institutions have started to buy Renminbi bonds again.

As more and more countries use Renminbi for trade settlement, when they have more and more Renminbi in hand, they naturally need to allocate assets.

The advantages of Chinese national debt are so obvious that it will certainly attract more and more foreign capital to allocate our national debt.

Recently, there is another case of international transactions in Renminbi.

The first batch of import transactions between the Pakistani government and Russian crude oil was paid in Renminbi, which is the first time Pakistan has used Renminbi to trade with Russia.

A major reason for Pakistan to choose Renminbi is that China can provide loans to Pakistan and has gained the trust of Pakistan.

There are many countries like Pakistan that are short of US dollar reserves and bullied by the US dollar, including Iran and Brazil.

The scope of "de-dollarization" is gradually expanding, and the advantages of Renminbi are more obvious.

China has nearly 150 major trade partners in the world, and China is continuously improving the cross-border settlement system.

More and more countries choose Renminbi to replace the US dollar for settlement.

Some countries use Renminbi for settlement, and some regard Renminbi as foreign exchange reserves, indicating that these countries need to buy more Renminbi bonds.

The Ministry of Finance recently issued 12 billion yuan of national debt in Hong Kong, and the winning interest rate is very low, but it was over-issued successfully, which is a very good proof.