Geopolitical events are usually bullish for US
Treasuries, as investors take refuge in US Government debt. But not
when such events directly involve the US — the world’s second
largest economy — and its allies on the one side, and China, the
world’s second largest economy and a major holder of US Treasuries,
on the other.
In this case, the geopolitical event – an
air standoff — may roil US Treasuries, if it turns into a financial
standoff.
From Tehran to Tokyo, U.S.
Geo-Strategic Shifts in Motion
From the Middle East to the East China Sea, the
last week’s events have offered a particularly vivid example of the
much-heralded shift in foreign policy priorities under the
administration of President Barack Obama.
But, taken in combination, September’s
last-minute U.S.-Russian accord that effectively averted a U.S.
strike against Syria, last week’s nuclear agreement with Iran, and
Rice’s message to Karzai clearly convey the message Obama
is indeed determined to minimize U.S. military commitments and
resources in the region to free them up for use elsewhere.
In that context, Tuesday’s B-52 flights over
the Senkaku/Diaoyu islands appeared designed to highlight that
impression.
Japan, US to coordinate stance on China’s
air zone expansion
“We want to hold consultation with US Vice
President Biden who will visit Japan this week and deal with the
matter by coordinating closely between Japan and the United States,”
Abe said.
The Pentagon has indicated that American
military forces would continue normal operations, despite China
scrambling fighter jets to monitor US and Japanese aircraft in the
zone.
And they’re off…
China Launches Moon Rover Mission
China’s military drives the country’s
space program, and that has caused wariness among Western
governments. Suspicions have been magnified by allegations that China
has stolen information for its space and missile programs. Congress
passed a law in 2011 that bans the National Aeronautics and Space
Administration from developing bilateral contacts with China,
although multilateral contacts are not proscribed.
But China’s program has reached a point where
deeper cooperation with the United States or Russia would make little
difference, said Gregory Kulacki, China project manager at the Union
of Concerned Scientists. He nonetheless supports closer contacts to
foster cooperation and reduce mistrust. “They don’t really need
to rely on any outside sources to continue to make the progress that
they’re making,” Mr. Kulacki said.
China’s an opportunity, not a threat,
gushes Cameron:
The Prime Minister, who is leading Britain’s
largest ever trade delegation to China, suggests the country
is on the brink of becoming the leading global economic
superpower and it is pointless to see it as a ‘threat’.
Melrox
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