Ken Fisher: What Happens If China Dumps US Treasurys?

Ken Fisher addresses the growing American phobia about China, specifically focusing on concerns about China potentially selling US Treasuries and causing a financial crisis. He draws a historical parallel to the 1990s when similar fears existed about Japan, which was actively buying American real estate and US Treasuries at the time. Those fears about Japan causing a crisis through Treasury sales never materialized. Fisher reveals that China currently owns only 2% of total US Treasuries, the same amount as Japan, questioning why China specifically generates such fear when Japan did not. He attributes this disparity to current 'China phobia.' Fisher explains that any country selling US Treasuries would likely be doing so to purchase treasuries from other countries, representing a change in preference rather than a fundamental shift away from treasury holdings altogether. He argues that the real factor affecting treasury rates is how US rates compare to other countries' comparable rates. Fisher emphasizes that US Treasuries represent such a significant portion of the global treasury market that it's difficult for any entity to completely avoid them. He concludes that these fears are greatly exaggerated and that even in the worst-case scenario, any negative impact on US Treasury rates would be minor.