After concerns about devaluation were allayed modestly by PBOC's fix overnight, China's ambassador to the U.S. wouldn't rule out the possibility of the Asian nation scaling back purchases of Treasuries in response to tariffs imposed by President Donald Trump.

US equities reacted immediately...

Though Treasury yields are modestly lower after the comments...

As Bloomberg reports, ambassador Cui Tiankai told Bloomberg Television, when asked whether China would consider reduced purchases of U.S. Treasuries...

"We are looking at all options...

That's why we believe any unilateral and protectionist move would hurt everybody, including the United States itself. It would certainly hurt the daily life of American middle-class people, and the American companies, and the financial markets."

As a reminder, China is America's biggest foreign creditor. It held $1.17 trillion in Treasuries as of January, or about 19 percent of all foreign holdings of U.S. government securities.