Beijing suspected of hiding US$700bn in US bonds

Liu Mingkang, the chairperson of the China Banking Regulatory Commission, has accidentally revealed that China may hold US$700 billion more in US bonds than it has previously stated, reports Japanese newspaper Nikkei, which said the disparity shows the country’s mistrust of the US.

The Chinese official said during a speech delivered in Washington DC on April 16 that over half of China’s foreign reserves have been invested in US bonds and that as of the end of March this year, around US$2 trillion of the country’s US$4 trillion in foreign reserves are in US dollars.

China US debt holdings reach US$1.305tn in October

China increased its holding of US bonds by US$10.7 billion to US$1.305 trillion in October. A financial expert said the surge of net capital inflow in October suggests that the demand for US debt is still healthy despite concerns about potential defaults, reports the financial news website of Chinese web portal Tencent.

BANK OF AMERICA: ‘This Is Not A Fluke’ — The Fed May Have To Ramp Up QE Again

“This is not a fluke: almost all of the underlying determinants of inflation point to weakness,” writes BofA Merrill Lynch economist Ethan Harris in a note to clients today.

For all of the talk of rising government bond yields and predictions for when the Federal Reserve will taper back its bond buying, Harris says, deflation is still a bigger risk than higher inflation – and disinflation could cause the Fed to actually ramp up QE if it continues.