China signals leverage as markets downplay Treasury and dollar risks

• Chinese banks are reportedly advised to limit US Treasury exposure, seen as moderate de-risking by China to reduce dollar volatility and sanctions risk.
• The bond market showed little reaction, but the dollar weakened across the board in the FX market, indicating concerns about de-dollarization and trust in the US.
• Analysts suggest the US is abdicating its role in the global order, leading to a structural shift away from the dollar as a reserve currency, with implications for supply chains and future economic leadership.

The discussion centers on US-China financial relations, China's efforts to de-risk from dollar exposure, and the broader implications for the dollar's reserve currency status. While Treasury markets appear to shrug off immediate news, the FX market reflects growing concerns about the dollar's long-term position due to a perceived loss of trust in the US and structural shifts in the global financial order.