The US Treasury Department investigates market manipulation? Require the signature of the big buyer of U.S. debt
A statement issued on Thursday showed that the US Treasury Department requires some US debt holders to sign, mainly for those holding large positions in the 10-year US debt issued at the end of last year. If on November 16 or December 14, 2020, those investors who hold 0.875% of U.S. debt due in November 2030 reach or exceed $4.1 billion, they need to report to the government before July 22.
The request for signatures of these major U.S. debt buyers dates back to 1996, when corresponding measures were taken in response to the Salomon Brothers bond market scandal. This is the 17th time the Treasury made such a request. The last time was in June 2019. .
In 1991, Mozer, a partner of Salomon Brothers, illegally manipulated the government bond market. At that time, traders conspired to lower the price of Treasury bonds, and then sold Treasury bonds at a high price to customers who had booked Treasury bonds at a fixed price to make a higher price difference. Earlier, Goldman Sachs had also been involved in an investigation of manipulating government bond prices.
Foreign media analysis believes that this move by the Ministry of Finance is aimed at preventing improper transactions and preventing some institutions from trying to monopolize the supply of a certain security to raise the cost of liquidation. In addition, a particular security has become scarce and expensive in the repurchase agreement market before. When there are signs of large-scale short-selling of securities in the market, the Ministry of Finance has also made such a request.
In addition, the European Commission has also cooperated with the US Department of Justice, the Securities Regulatory Commission, and the New York Financial Services Department to conduct transaction manipulation investigations.
However, a Treasury official said on Thursday that the request does not mean improper manipulation at the end of 2020. The debt management team of the Ministry of Finance makes such a request about once a year, but it is not fixed. U.S. Treasuries plummeted in November 2020, and yields soared. The yield on the benchmark 10-year U.S. Treasury rose from 0.72% in November last year to nearly 1% in early December. As of March this year, the benchmark 10-year U.S. Treasury yield has risen to 1.77%, the highest in a year.
With the increase in short-sale demand, the cost of repurchasing US debt soared, and the overnight repurchase rate of loans in the money market also fell below -3%. Since then, U.S. bond yields have fallen sharply, and the repurchase market has also calmed down.
