China sells the most US assets in 4 years, dumping $21 billion of US stock and Treasury bonds

• Chinese investors sold $21.2 billion in US equities and Treasuries, the US Treasury said Wednesday.
• Chinese investors sold an all-time record $5.1 billion of US stocks that month.

Chinese investors offloaded $21.2 billion of US assets in the month of August, the most in four years, according to US Department of the Treasury data cited by Bloomberg.

The dumping of US securities comes as the onshore yuan weakened in August to its lowest point since November, fueling speculation Beijing is looking for ways to prop up its currency.

Most of the $21.2 billion in sales were in US Treasury bonds and stocks, and China funds also slashed agency debt holdings, the report said. Chinese investors dumped roughly $5.1 billion of US stocks in August, the most on record.

According to Bloomberg, the pace of US asset sales by investors in China led some on Wall Street to theorize that officials in Beijing were looking for way to further prop up the weakening yuan, selling US bonds to increase their store of dollars that can be used to intervene to boost the currency.

China's economy has failed to rebound as expected from the COVID-19 pandemic, and Beijing is navigating an uncertain property market, a faltering currency, slumping trade, and weak growth.

The US bond market, meanwhile, has seen a strong sell-off over recent weeks from investors around the globe. The US 10-year Treasury yield is hovering near 5%, its highest since 2007.

Strategists at Barclays said this week that investors shouldn't expect that to come down anytime soon, except in the event of some financial shock or a recession.

"The hurdle for a [bond] rally is still high," the strategists wrote in a note Wednesday. "Despite data continuing to show a resilient economy, the consensus still expects it to slow very sharply over the coming quarters. Repeated misses beg the question whether the consensus has been overly confident about monetary policy being too tight. We argue that policy is barely tight and risks are skewed towards continued upside surprises."