Yu Yongding: Treasuries are Not Safe (TLT)

Bloomberg is reporting that, according to Yu Yongding, a former Chinese central bank adviser, U.S. Treasuries fail to provide the necessary safety and liquidity for China’s $2.45 trillion reserves. “I do not think U.S. Treasuries are safe in the medium-and long-run,” Yu, a member of the state-backed Chinese Academy of Social Sciences, wrote yesterday in an e-mailed response to questions. China is unable to sell the securities in a “big way” and a “scary trajectory” of budget deficits and a growing supply of U.S. dollars put their value at risk, he said. China’s holdings of Treasuries, the largest outside of the U.S., totaled $867.7 billion at the end of May, down from $900.2 billion in April and a record $939.9 billion in July 2009. U.S. Treasuries, as measured by the iShares Barclays 20+ Year Treasury Bond Fund

are currently higher on the session by 0.60%, trading at $99.34. For the full story, please visit… http://www.bloomberg.com/news/2010-08-03/treasuries-lack-safety-liquidity-for-china-yu-yongding-says.html