But Chinese and western officials in Beijing said China was caught in a "dollar trap" and has little choice but to keep pouring the bulk of its growing reserves into the U.S. Treasury, which remains the only market big enough and liquid enough to support its huge purchases. In March alone, China's direct holdings of U.S. Treasury securities rose $23.7bn to reach a new record of $768bn, according to preliminary U.S. data, allowing China to retain its title as the biggest creditor of the U.S. government.If the hoped-for end to the recession does not come in the second or third quarter, upward pressure on intermediate- and long-term interest rates may abate, and Treasuries could rally. If the stock market does another swoon, a flight to safety would give additional buying support for higher-priced Treasuries. b. The case for selling Treasuries: The author discussed the potential for a bursting bubble for bonds in early January. Since then, there have been signs that the bubble might be deflating. The chart below of the ETF for long-term Treasuries, the iShares Barclay's 20-Plus-Year Treasury Bond ETF ( TLT) shows the dramatic move down over the past two months. The decline was especially steep from late April to early May. An attempt to rally in May appears to have failed.