By Gertrude-Chavez-Dreyfuss
NEW YORK (Reuters) - China and Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research, Stock Buzz) should take the blame for the U.S. bond market's recent woes that pushed benchmark yields to their highest level since mid-2006, independent investor and author Dennis Gartman said on Tuesday.
Gartman, speaking at the Reuters Investment Outlook Summit in New York, said China's purchase in May of a 10 percent stake in private equity group Blackstone is a harbinger of other investments that will shift funds away from U.S. Treasuries.
Meanwhile, Wal-Mart's decision early this month to cut by as much as 30 percent the number of supercenters it plans to open this year could push U.S. consumer prices higher, he said. Gartman, who publishes "The Gartman Letter," a widely read investment advisory newsletter launched in 1987, viewed Wal-Mart's move as a turning point for U.S. inflation.
U.S. Treasury debt prices again fell on Tuesday, tracking other fixed-income markets, as investors fretted that strong global economic growth could fuel inflation and force central banks to raise interest rates. Losses pushed 10-year yields toward 5.25 percent, which they hit on Friday.
Gartman called China's purchase of the stake in Blackstone "a seminal event, a tidal shift."
In May, China said its new state investment agency was taking a $3 billion stake in U.S. private equity firm the Blackstone Group BG.UL , a sign Beijing was keen to get higher returns on its hoard of currency reserves.
China's $1.2 trillion in reserves have until now been invested mostly in U.S. Treasury notes, but its $3 billion investment in Blackstone suggests it will diversify part of those holdings in the future into other instruments such as U.S. stocks and corporate bonds. That should drive U.S. Treasury yields higher.
Analysts say the Blackstone agreement gives China a stake in the private equity bonanza sweeping the world and seals a key alliance for the U.S. private equity group. Continued...
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| Paper | Aug 20 - 21, 2008 | Manufacturing |
| Japan Investment | Jul 01 - 2, 2008 | Country Summits |
| Global Real Estate | Jun 23 - 25, 2008 | Real Estate |
| Consumer and Retail | Jun 16 - 18, 2008 | Consumer Retail |
| Investment Outlook | Jun 09 - 12, 2008 | Financial Services / Exchanges |
