Data is lagged, but China doesn't need to sell longer dated notes to get liquidity. The state banks also have in the past uses the swaps market to borrow dollars to fund spot sales. 2/

The exact composition of China's treasury portfolio isn't known, but my sense is that it historically has had a bit more duration than the average central bank. Even so China has a ton of maturing 10ys bought in 2015, 5ys bought in 2020 & 2ys bought in 2023. 3/

SAFE also has a big equity portfolio and the TIC data clearly shows that China has been rebalancing its portfolio as the US stock market soared over the last 2 years (trying to keep its equity and USD share from passively rising) 4/

I doubt SAFE is doing this (it responds with a lag to market moves in my judgement) but a true portfolio rebalancer would actually be selling bonds and buying equities as the equity market sold off ... 5/

SAFE's holdings aren't as big relative to the US market as they once were -- even counting euroclear/ belgium, US bond holdings are only around 4% of US GDP, and only a slightly higher fraction of the stock of outstanding marketable Treasuries (ex the Fed). 6/

And China simply hasn't been a big net buyer or net seller of Treasuries over the last 10 years. The US BoP data shows a roughly flat overall portfolio, with a modest shift toward bills recently 7/

The baseline from the last few years is actually a bit of a passive rolloff (as maturing Treasuries aren't all reinvested in the notes market) and likely a bit of maturity shortening (why buy 10ys when 2s yield more) 8/

SAFE could of course be an active shorter of the 10y if it wanted to -- borrowing 10ys to sell them. But if it did so the Fed would know pretty quickly ... as the GSIBS who would lend the Treasuries are are regulated by the Fed/ US friends 9/

The data I use is lagged, but I think I have a reasonably good read on what SAFE has been doing over the last 10 and lat 5ys (read some of my blog posts). Am all ears though if anyone has real market color ... 10/10