“They don’t need to build any more buffers,” Tim Alt, who manages currencies and bonds with Aviva Investors, told the WSJ. They “have an alternative where you don’t have to recycle everything into U.S. Treasurys.”
Meanwhile, the drop-off in demand among investors European and Japanese buyers is attributed to the increased cost of protecting themselves from the currency risks of buying dollar-denominated debt.
Additionally, Torsten Sløk, chief international economist at Deutsche Bank Securities, argued that the lack of demand is more likely an indirect byproduct of U.S. trade tensions with China this year. The weakened Chinese yuan currency also dragged down the currencies of many of its trading partners and neighbors.
Sløk believed that the depreciating Asian emerging countries’ currencies have helped their export industries but also cut back the need for them to buy Treasuries, which has been a popular way for their central banks to depreciate their currencies against the USD.
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