The outcome of the trade war and ongoing negotiations between the world's two largest economies is a looming danger, BlackRock CEO Larry Fink told CNBC on Sunday — but not for its immediate impact on markets or growth.
The threat Fink articulated, according to him, is one that's not being discussed much, but needs to be: The long-term impact of the U.S.-China trade war on U.S. Treasury bonds.
"What worries me about the conversation between the U.S. and China — China has a $1.3 trillion pool of U.S. Treasurys, they've been accumulating U.S. Treasurys because of the trade deficit," Fink told CNBC's Hadley Gamble in an interview.
"Now as China reduces its trade deficit with the U.S., the likelihood of them reducing their need for U.S. Treasurys is large," he added.
China is the biggest foreign buyer of U.S. sovereign debt. In January, media reports revealed that officials in Beijing recommended the Chinese government lower — or even stop — its buying of U.S. debt.
That prospect is something market analysts have described as a major threat to markets as Treasury financing needs climbed significantly in 2018 and U.S. debt issuance heads toward record highs.