Apparently China just allowed the Yuan to get a haircut: http://www.zerohedge.com/news/2016-05-03/us-futures-tumble-after-ch...

There had been some speculation over the past few days that "something had to give" with the Yen and Yuan strengthening more quickly than their export-based economies could afford, and now, along with the Aussie whack to their interest rates, we see our trade partners again working to devalue. In the case of the Yuan, I say they "allowed" the Yuan to slip because I believe there are some very large economic forces trying to push down on the Yuan, and China needs the Yuan to get weaker, but they need it to move at a certain pace to avoid major economic upheaval in the process.

How does this affect commodity prices? It appears they slammed from about 6.1 to 6.5 Yuan-per-dollar, or about a 6.6% devaluation. For the sake of easy math, let's say they were buying $10 beans yesterday, which cost then 61 Yuan/bushel (yes, I realize their CIF prices are considerably higher...). In order to buy a bushel of beans with those same 61 Yuan today, we would need to drop our price to $9.38. It doesn't matter what happens to the dollar in this case because China's devaluation simultaneously impacts all pairs (i.e. Brazil is feeling the same thing). So, until someone else decides to pay more for the beans, or Mother Nature forces their hand, China effectively just cut our soybean price.  For as long as they are able to do so, China decides when they increase or decrease the value of their currency. Isn't it mighty convenient that they can load up on hard commodities THEN devalue their currency (consider recent news reports that China has been the push behind crude's big rally)?  This isn't the first time I've noticed this in the past year or so.

As long as they hold a monstrous horde of FX reserves, they can afford to push and pull on their funny money with impunity.  If they have a true economic crisis, and I find it unlikely that any country on their trajectory wouldn't at some point, they may see significant capital flight and a rapid "drain" of reserves, at which point fiddling with their currency peg just might not seem worthwhile (remember the Swissy a year or so ago?).

Until then, for all of those who say China is going to dump our treasuries en masse, I find it very hard to believe they would give up their ability to play the game.