China Outlook for 2024

Apollo Chief Economist

Since the Fed started raising rates, the biggest foreign buyer of US Treasury bonds has been the yield-sensitive private sector, see the first chart below.

But with rates peaking, the foreign private sector has been slowing purchases, see chart below.

The foreign official sector has been a net seller during this rate cycle. This is also the case for China, where holdings of US Treasuries have declined by $300 billion since 2021, see the second chart below.

With growth slowing in China due to demographic headwinds, slowing exports, and a deflating housing market, demand for US Treasuries from the foreign official sector will likely remain weak.

Our 2024 outlook for China is available here.

Foreign private sector is slowing its purchases of US Treasuries
Source: Treasury, Haver Analytics, Apollo Chief Economist
China holding $300 billion less in US Treasuries than in 2021
Source: Bloomberg, Apollo Chief Economist

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