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Foreigners Dump Record Amount Of US Treasurys In Past Month

Posted By admin On December 30, 2011 @ 7:04 am In Money Watch | Comments Disabled

Zero Hedge [1]
December 30, 2011

With year end fund flows making absolutely no sense for the most part, thank you global central planning, as the euro plunges and the market refuses to follow, with risk assets rising on speculation the ECB (and/or Fed) are about to restart printing yet gold collapsing (on one or two hedge funds liquidating, yet econ PhDs already rewriting their theses on why the “gold bubble has popped”), and finally with Treasurys soaring to near all time highs (10 Year under 1.9% yesterday even as stocks surged on data from the National Advertisers of Realtors, aka NAR, of all fraudulent and corrupt entities), here is the latest observation to make the confusion complete. As the Fed’s critical H.4.1 weekly update [2]shows (which is leaps and bounds more accurate than the Treasury’s TIC international fund flow data), in the week ended December 28, foreign investors sold the second highest amount of  US bonds in history, or $23 billion, bringing total UST custodial holdings to $2.67 trillion, a level first crossed to the upside back in April. This number peaked at $2.75 trillion in mid-August, and as the chart below shows the foreign holdings of US paper have been virtually flat in all of 2011, something which is in stark contrast with what the price of the 10 Year would indicate vis-a-vis investor demand. And going back further, the last week is merely the latest in a series of Custodial account outflows. In fact, in the last month (trailing 4 weeks), foreigners have sold a record $69 billion in US paper, a monthly outflow that was approached only once – in the aftermath of the US downgrade (when erroneously it is said that a surge in demand for US paper pushed rates lower – obviously as the chart shows nothing could be further from the truth).

So here is the conundrum for today: did China continue to dump US paper in the year end, something we saw started with the October TIC data, or was it French banks continuing to sell off any non-EUR assets, and in the process repatriate proceeds, keeping the EUR higher. We don’t know, nor frankly, in this uber-centrally p(l)anned market, do we care much any longer.

Chart 1 – total UST holdings in Fed custody:

Foreigners Dump Record Amount Of US Treasurys In Past Month Fed%20Custody%20Holdings [3]

Chart 2 – monthly (trailing 4 week) change in UST holdings:

Foreigners Dump Record Amount Of US Treasurys In Past Month UST%20Holdings%20Custody%20Account 0 [4]


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URLs in this post:

[1] Zero Hedge: http://www.zerohedge.com/news/foreigners-dump-record-amout-us-treasurys-past-month

[2] H.4.1 weekly update : http://www.federalreserve.gov/releases/h41/hist/h41hist9.txt

[3] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2011/12/Fed%20Custody%20Holdings.jpg

[4] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2011/12/UST%20Holdings%20Custody%20Account_0.jpg

[5] Foreigners Sell Second Largest Amount Of US Bonds Ever In Past Week, Record $93 Billion In US Paper Sold In Past 2 Months: http://www.prisonplanet.com/foreigners-sell-second-largest-amount-of-us-bonds-ever-in-past-week-record-93-billion-in-us-paper-sold-in-past-2-months.html

[6] Second Biggest Weekly Drop Ever In Treasurys Held In The Fed’s Custodial Account As Foreigners Dump: http://www.prisonplanet.com/second-biggest-weekly-drop-ever-in-treasurys-held-in-the-feds-custodial-account-as-foreigners-dump.html

[7] Foreigners Dump $74 Billion In Treasurys In 6 Consecutive Weeks: Biggest Sequential Outflow In History: http://www.prisonplanet.com/foreigners-dump-74-billion-in-treasurys-in-6-consecutive-weeks-biggest-sequential-outflow-in-history.html

[8] Did Foreigners Bail Out The US Stock Market… By Dumping $56 Billion In Treasurys?: http://www.prisonplanet.com/did-foreigners-bail-out-the-us-stock-market-by-dumping-56-billion-in-treasurys.html

[9] Why Did The Fed Inject Banks With A Record Amount Of “Other” Cash In The Past Week?: http://www.prisonplanet.com/why-did-the-fed-inject-banks-with-a-record-amount-of-other-cash-in-the-past-week.html

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