Why investors fear a China Treasury dump

What would happen if China were to dump its entire Treasury portfolio in one fell swoop? The prospect of a wholesale sell-off - and interest rate spike - is a recurrent nightmare, but unlikely to become reality.

One of the big questions now being debated is, 'What would happen if China were to dump its entire Treasury portfolio in one fell swoop?' Caroline Baum addressed that question in "China Doesn't Steer the U.S. Interest-Rate Ship":

"Like a highly contagious virus, fear that foreigners will dump all their U.S. Treasury securities spreads through the market at periodic intervals.

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