I asked Grok about this. Appears to be all short term fluctuating not a serious harbinger of dire outcomes longterm
Conclusion
You’re likely correct that China dumping Treasuries won’t stop the Fed from dropping rates if economic conditions warrant it—growth and employment remain key drivers. Long-term, the U.S. could benefit from reduced foreign debt reliance, a stronger export sector, and a push toward fiscal discipline, though short-term volatility and inflation are risks. The outcome hinges on how policymakers and markets respond, but the U.S. economy’s depth and adaptability suggest it could turn this challenge into an opportunity.
Potential Economic Advantages for America if China Dumps U.S. Treasury Bonds
Less Foreign Debt Dependence: Reduces reliance on foreign capital, encouraging domestic investors to buy more Treasuries.
Dollar Depreciation Boosts Exports: Lower dollar value makes U.S. goods cheaper abroad, potentially shrinking trade deficits and boosting manufacturing.
Pressure for Fiscal Discipline: Higher yields increase borrowing costs, pushing the U.S. to address deficits and spending sustainably.
Market Resilience: Deep Treasury market can absorb sell-off with buyers like Japan or U.S. institutions stepping in, maintaining confidence.
Trade Rebalancing: Accelerates decoupling from China, fostering reshoring and supply chain diversification for long-term security.
Why This Might Be Beneficial in the Long Run
Addresses Imbalances: Shifts economy toward exports, savings, and production, reducing reliance on trade deficits and foreign financing.
Potential Risks: Higher borrowing costs and inflation could slow growth or hurt consumers if not managed well.
Net Outcome: Benefits depend on U.S. adaptation, but could strengthen economic resilience over time.