In September, when the US President announced to pursue the trade war with China with additional 10% restrictions on Chinese imports, the dollar suffered losses in the Forex markets. China reduced holdings of US Treasuries in July as the trade war began and China's ownership of US bonds, notes and securities shrank by $1.17 trillion, while Japan, France, Singapore , Taiwan and Saudi Arabia increased their holdings. Japan's holdings increased to $1.04 trillion. Lately, Japanese investors have sold more than $60 billion in US bonds and bought European bonds, which showed quantitative easing in the euro area. The US bond market now expects at least two rate hikes this year, as strategists believe the factors driving the economy and measures taken by European Central Banks to end asset purchases raise doubts about whether rate increase. The U.S. 10-year yield is scrutinized by investors because it is tied to loans, companies, markets and even mortgages, and yield growth is inversely related to price. In Europe, Italian government bonds fell on optimism that the new coalition's budget will be based on EU rules on fiscal discipline. Two- and five-year bond yields fell 15 basis points to their lowest level since July, while German debt rose to a four-month high. European high yield bonds also became very cheap in September due to elevated political risks in Italy. With the influx of funds, European bonds' historic record of underperformance relative to U.S. bonds could be reversed, making European high-yield bonds more attractive. Experts believe the bond market could be repriced. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get Original Essay Investors believe that the Fed will raise rates without creating any impact on the economy. The chief US rate strategist believes bonds have been extremely dovish and mispriced in recent years. The 10-year yield was above 3% in April, May, June and August, but it couldn't hold for long. Currently, 10-year Treasuries yield 3% mover and 2.8% 2-year, and the federal funds rate is expected to grow between 1.75 and 2%. The US jobs report showed an average increase in hourly wages which boosted treasuries, but the sales report had a negative impact as it was lower than expected, although revised retail sales data was later released , which showed a sales increase in July of 0.7 percent. cent, an expected increase of 0.5%. Emerging market central banks have been buying US government bonds, and demand for government bonds has declined due to increased selling by emerging markets. Reducing liquidity in the global bond market can harm markets, in general. Central banks in several countries are running out of reserves, and countries like Turkey and Argentina are selling US government bonds to handle currency-related issues, even though there are many investors who want to buy US Treasuries.