What Happens If China Dumps US Treasurys?
Ken Fisher argues that fears about China dumping US Treasurys are overblown, noting that China only owns 2% of total US debt. He draws parallels to similar unfounded fears about Japan in the 1990s and explains that Treasury selling is typically just countries switching preferences between different sovereign debts.
Summary
Ken Fisher addresses what he considers an irrational fear about China potentially selling US Treasury bonds, arguing this concern stems from broader 'China phobia' rather than economic reality. He provides historical context by comparing current fears to similar concerns about Japan in the 1990s, when Japan was buying significant amounts of US real estate and Treasurys during their economic bubble period. Fisher emphasizes that China currently holds only 2% of total US Treasurys, the same amount as Japan, and actually less than the eurozone or Britain - countries that don't generate similar fears. He explains that when countries sell one nation's treasury bonds, they typically do so to buy another country's bonds based on changing preferences rather than abandoning government securities altogether. This creates a 'musical chairs' effect where money circulates between different sovereign debts. Fisher argues that any real concern should focus on relative interest rate movements between countries rather than individual country sales. He concludes that it would be difficult for any country to completely avoid US Treasurys given their importance in the global treasury market and their role in meeting the needs of private sector owners, governments, and central banks.
About this episode
Ken Fisher, Founder, Executive Chairman and Co-Chief Investment Officer of Fisher Investments, addresses the growing fear that China might sell off its US Treasury holdings. Ken explains why this common worry is largely overblown and compares it to similar unfounded fears about Japan in the 1990s. As Ken details, China holds a small percentage of total US Treasurys, limiting the potential impact from it selling US Treasurys. When a country sells US Treasurys, Ken says it doesn't signal a looming economic crisis but simply shows a shift in investment preferences. Ken states that a significant sell-off by any single nation would, at worst, have only a minor negative impact on interest rates. For more of Ken Fisher's thoughts on the markets, visit us at https://www.fisherinvestments.com. To make sure you never miss an update, subscribe to our channel: https://www.youtube.com/@fisherinvestments?sub_confirmation=1. Have any feedback on this video? We would greatly appreciate if you could complete this 1-minute survey: https://fi.co1.qualtrics.com/jfe/form/SV_6Vw1ezlogR044S2?VideoCode=KFWeekly26Mar2026 Want to learn more about the insights and support our clients enjoy? Explore Fisher Investments' free educational webinars: https://www.fisherinvestments.com/en-US/insights/webinars To learn more about Fisher Investments’ reviews of markets and financial topics, download the Fisher Market Insights Mobile App, available for iOS on the App Store (https://apps.apple.com/us/app/fisher-investments/id1169932255) and for Android on Google Play (https://play.google.com/store/apps/details?id=com.fisher.investments&hl=en_US). Connect with Fisher Investments on: • Facebook - https://www.facebook.com/FisherInvestments • X - https://twitter.com/fisherinvest • LinkedIn - https://www.linkedin.com/company/fisher-investments • Instagram - https://www.instagram.com/fisher.investments • TikTok - https://www.tiktok.com/@fisher_investments You can also follow Ken Fisher here: • Facebook - https://www.facebook.com/KenFisher.FisherInvestments • X - https://twitter.com/KennethLFisher • LinkedIn - https://www.linkedin.com/in/ken-fisher/ • Instagram - https://www.instagram.com/kenfisher_fisherinvestments/ Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. Nothing herein is intended to be a recommendation. The opinions expressed are subject to change without notice.
Key Insights
- Fisher argues that China owns the same amount of US Treasurys as Japan (2% of total) and actually less than the eurozone or Britain, making fears about Chinese selling inconsistent
- Fisher claims that when countries sell treasury bonds, they typically do so to buy other countries' bonds based on preference changes, creating a 'musical chairs' effect where money circulates between sovereign debts
- Fisher contends that it's difficult to completely avoid US Treasurys because they represent such an important part of the global treasury market and serve essential needs for private sector owners, governments, and central banks
Topics
Transcript
[0:04] So it's been years now as America's built a growing phobia about China. And I don't want to get into whether the phobia about China is justified or not. That's not where I'm going. That fear of China selling US Treasurys is deemed to be of some significance and problematic, and could cause a crisis and other nonsense like that. The reality is, [0:36] if you went back into the period of the 1990s, in those days, you used to hear the same thing about Japan in those days, of course. And people, you know, don't really think about this very well in memory. But by the time you get to 1990, the Japanese stock market's worth about half…
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