Foreign central banks have rapidly sold $82 billion in US Treasuries amid tensions in the Middle East, but top financial experts don’t think it will trigger a market collapse. Despite this sale, Treasury Secretary Scott Bessent is seen as a strong defense against “bond vigilantes” who target distressed countries.
The rapid sell-off has raised alarm bells internationally, but Louis Navellier, founder of Navellier & Associates, believes it’s “insignificant” at this point. He points to Bessent’s reputation and his ability to prevent foreign investors from taking advantage of the US debt load.
Navellier notes that the recent sell-off in Treasuries was driven by lackluster domestic auctions rather than foreign liquidations. The 10-year Treasury yield has risen due to weak demand, not because of foreign central banks selling their bonds.
Despite concerns about a strengthening dollar and further market downturns, economists say that the market will self-correct. Enrique Diaz-Alvarez, Chief Economist at Ebury, explains that foreign investors who sell US Treasuries will likely replace them with USD through oil purchases or currency interventions.
This suggests that the sell-off may not lead to a destructive cycle of selling and buying back US bonds. Instead, it’s seen as a natural part of market fluctuations.
Source: https://finance.yahoo.com/markets/currencies/articles/exclusive-treasury-sell-off-mounts-123104720.html