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Like the intensity of President Donald Trump's trade war China continues to fall back, analysts are starting to worry about the possibility that China can exercise its version of a “nuclear option”. Chinese President Xi Jinping has not indicated any desire to retreat, and it is perhaps because he knows that he has many cards to play. According to CNBCChina has more than $ 1.2 dollars in America Titles backed by mortgage claims.
CNBC notes that the Ginnie MAE loan official considers that the Chinese MBS portfolio represents 15% of the mortgage sales in the United States, the US housing market would be completely devastated if XI decided to remove the gloves and flood the market with its MBS. It should also be mentioned that China has many American debts in the bonds of the Treasury. The combined weight of this economic power could devastate the American economy.
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Guy Cecala, The executive president of Inside Drongnce Finance Finance, told CNBC: “If China wanted to hit us hard, they could unload treasures. This is a threat? Of course, this is the case. They will look for levers and try to put pressure. Targeting housing rates and mortgage rates is a powerful driver of something.”
Mortgage rates have increased rapidly due to the recent sale of Treasury bonds, and 1.2 billion of dollars of securities backed by mortgage claims that would flood the market would be a devastating punch for several reasons. First, this would almost immediately lead to higher interest rates at a time when most Americans already have difficulty with housing costs.
Secondly, China flooding the market with its MBSS could cause a chain reaction where other nations follow suit to avoid being stuck without chair when music stops. Canada and Japan also have important security portfolios supported by mortgages. In normal circumstances, it is difficult to imagine that Japan or Canada take such an extreme measure.
Tendency: Home's Private Credit Fund's historically paid a yield in annualized dividends of 8.1% *,, which gives access to a short -term loan basin supported by residential real estate with only a minimum of $ 100.
Japan and Canada have been closed to American and economic policy for decades, but Trump has targeted the two nations with punishing prices. Even if the prices on Canada and Japan are not as extreme as those of China, it is not difficult to imagine that one or the other nation drifts to Chinese orbit. In other words, current circumstances are anything but normal.
