China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.


"It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind."


"By selling Treasuries to defend the renminbi, they're preventing Treasury yields from going lower despite the fact that we've seen a sharp drop in the stock market," David Woo, head of global rates and currencies research at Bank of America Corp., said on Bloomberg Television on Wednesday.

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