The U.S. Treasury Department released the latest data a couple of days ago, sparking a lot of discussion among friends, because in this data, China's holdings of U.S. Treasury bonds decreased by $4 billion.

This operation is quite puzzling.

Last month's data showed an increase of $20.5 billion, but this month's data shows a decrease of $4 billion.

Are we increasing or decreasing our holdings of U.S. Treasury bonds, or are we always doing swing operations?

Here we need to take a look at the current issues with U.S. Treasury bonds.

First, the current yield on U.S. Treasury bonds has increased, which is likely to put greater pressure on the U.S. banking industry.

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Now, due to the expected increase in supply, the spread of U.S. Treasury bonds has started to rise.

With the increase in interest rates and some regional bank bankruptcies, consumers are looking for other ways to get higher returns.

At the same time, U.S. bank savings have begun to decrease this year.

More people withdrawing money from banks will prompt banks to raise their savings account interest rates, which will cost small banks more.

On the other hand, the Federal Reserve System is still continuing to shrink its balance sheet, which is also likely to plunge the U.S. capital market into chaos.

If the U.S. Treasury sells a huge amount of bonds to the market, and the Federal Reserve also sells U.S. Treasury bonds due to balance sheet reduction, the bond market will face a serious oversupply.

Under the superposition of the above factors, central banks of various countries will inevitably further reduce their holdings of U.S. Treasury bonds, so it is normal for China to reduce its holdings of U.S. Treasury bonds.

Many people have not understood the changes in the balance of U.S. Treasury bonds.

An increase in the balance does not mean that we have bought in, and a decrease in the balance does not mean that we have sold.

It's easy to understand with another example.

Suppose a friend's stock account increases from 1 million to 1.1 million, it does not mean that he has bought an additional 100,000 worth of stocks, it is very likely that the stock price has risen by 10%.

If the stock price has risen by 20% during this period, it means that he did not buy more stocks during this period, but even sold some stocks.

Similarly, if his stock account decreases from 1 million to 900,000, it does not mean that he has sold 100,000 worth of stocks, it is very likely that the stock price has fallen.

Because the price of U.S. Treasury bonds rose significantly in March this year, compared with the increase in China's balance at that time of only 2%, my judgment is that China has slightly reduced its holdings, but the price increase has filled the gap of the reduction.

In April, the decrease of only $4 billion is too small a proportion of China's holdings to judge.

But in any case, from the long-term trend, it is certain that China will reduce its holdings of U.S. Treasury bonds.

The current economic situation of the United States is that if U.S. Treasury bonds lose the favor of global buyers, it will be a complete failure.

But most countries have been slowly reducing their holdings of U.S. Treasury bonds and turning to reserve gold, and no one can predict whether this will trigger a new debt crisis in the United States.

From this perspective, it also shows that we need to sell more U.S. Treasury bonds and make room to increase our holdings of gold.

China's current holdings of U.S. Treasury bonds are far lower than ten years ago.

Although the holdings of U.S. Treasury bonds increased slightly last month, our current holdings are obviously lower than Japan and are slowly approaching the third place of the United Kingdom.

With the continued reduction in the future, our holdings are very likely to become the third in the world.

Although Yellen has repeatedly stated that she wants to restore the economy through cooperation with China, some economists have pointed out that the United States' signal of concession is just to borrow more money from China in a soft way.

At present, what is more important for China is to take advantage of this great opportunity to continuously expand the share of the renminbi in global trade and enhance the international status of the renminbi.

It seems that the United States wants China to buy more U.S. Treasury bonds, and the opportunity is slim.