China regulators urged banks to curb US Treasury exposure citing concentration and market volatility risks.

Sources told Bloomberg officials advised financial institutions to limit buying US government bonds and pare down high exposure positions.

Guidance suggests growing awareness that large US debt holdings expose banks to sharp market swings, especially since Trump's return with trade, spending, Fed attacks, and geopolitical policies affecting sentiment.

Debate about safe haven status of US Treasuries and dollar's reserve currency appeal; gold prices skyrocketed as investors diversify from dollar assets.

Any hint of large Treasury selling could push yields sharply higher and increase US borrowing costs.

Biggest overseas Treasury investors: Japan $1.2T, UK $890B, China $680B; China's advice doesn't apply to state holdings; India and other EMs also considering holdings.

Watch foreign holdings of Treasuries and implications for world's biggest bond market.

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