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China urges banks to curb US Treasuries exposure, Bloomberg News reports

BY Reuters | TREASURY | 02:02 AM EST

Feb 9 (Reuters) - Chinese regulators have advised financial institutions to curb holdings of U.S. Treasuries ?due to concern over concentration risk and market volatility, Bloomberg ?News reported on Monday, citing people ?familiar with the matter.

Officials urged ?banks to ?limit purchases of U.S. government bonds and instructed those ?with high exposure ?to pare down positions, though the advisory does not apply to ?state holdings, Bloomberg reported.

The ?People's ?Bank of China and National Financial Regulatory Administration did not immediately respond to ?Reuters' requests for comment.

The advisory was framed as an effort to diversify market risk rather than a response to geopolitical maneuvering or a loss of confidence ?in ?U.S. creditworthiness, Bloomberg reported.

The guidance came before President Xi Jinping ?held a telephone call with U.S. President Donald Trump last week, Bloomberg said.

Trump's unpredictable approach to trade and diplomacy, his attacks on the Federal Reserve and huge increases in public spending ?has left market participants questioning the haven status of U.S. debt. (Reporting by Heera Hari in ?Bengaluru; Editing by Clarence Fernandez and Christopher Cushing)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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