Rising above the drumbeat of worries about US deficit spending and monetisation of debt, one question looms: "If China and other nations will not keep buying record amounts of US Treasuries, who will?" Trends culminating in the mix of investors are seen as evolutionary, a one-way street. We see a pendulum.

An air of inevitability exists around a potential slowdown in capital flows from outside the US to its Treasury market. Moreover, quantitative easing - absorption of Treasury supply by the Federal Reserve - has limits (although we do not believe the limit is anywhere near the targeted figure announced to date). Yet a blueprint for increasing adequate demand for US government debt has long been available, producing its own air of inevitability as alternatives narrow. China may have no choice but to step back, and the US may have no choice but to look within its borders to raise money, offer its citizens tax parity with sovereign investors - and take a page from earlier promotions of public debt that made it easy for Main Street to invest.

With US consumer spending slowing, regardless of intentions or motives, China and other trading partners likely will trim Treasuries purchases. Since much of China's buying, in particular, is said to be driven by trade imbalances and exchange rate considerations, falling exports by China to US consumers means that China probably will not be able to keep investing excess US dollars in Treasuries at recent record levels.