Should the cut in treasury holdings be taken as an indication of no confidence in the US economy, and the administration itself?  Doubtful… although I do not have a very high level of confidence in the “Celebrity in Chief.” This could just be a prudent move to manage risk going forward, in what is to be an impending long term decline in US treasuries.

They key question is when it will start.  I’d say that China’s smartly not trying to time the market, and slowly reducing the exposure.  Assets that will be most adversely affected by rising rates will be the first to go (I’ve yet to find further details on exactly what Government notes were sold).

Oddly enough, with the QE2 initiative, who do you think bought up the American debt from China?  Who else but good old Uncle Ben!

I truly do not take this as a vote of no confidence in the US economy, more of a minimization of risk exposure after a significant period of declining interest rates.  They’ll be back in the market to buy up American debt when the time is right.  What other alternative do they have?  Oh yeah, buying up the world’s oil & gas assets, further squeezing supply for the United States.

Honestly, this action by China makes for better headlines, than having any real world impact.