After Dumping 30% Of Its Treasury Holdings In Half A Year, Russia Warns It Will Continue Selling US Debt

Tyler Durden's picture

Just in time for the end of QE2, when the US needs every possible foreign buyer of US debt to step up to the plate, we get confirmation that yet another major foreign central bank has decided to not only not add to its US debt holdings, but to actively sell US Treasurys. The WSJ reports that "Russia will likely continue lowering its U.S. debt holdings as Washington struggles to contain a budget deficit and bolster a tepid economic recovery, a top aide to President Dmitry Medvedev said Saturday. "The share of our portfolio in U.S. instruments has gone down and probably will go down further," said Arkady Dvorkovich, chief economic aide to the president, told Dow Jones in an interview on the sidelines of the St. Petersburg International Economic Forum." Well, with Russia out, at least we have China and Japan continuing to buy US debt.... Oh wait, China is contemplating dumping two thirds of its debt you say? And the biggest buyer of Japanese bonds is now in the process of selling Japanese bonds in the open market for the first time (so not really in the market of US bonds). Well, surely US households will step up to the plate. After all they all have so much "cash on the sidelines" courtesy of the RecoveryTM ©® that they can't wait to dump it all into paper yielding less than 3% a year, and has negative real rates of return. Wait, what's that: according to the Fed, in Q1 US "households" sold $1.1 trillion annualized in Treasurys to the Fed? So, let's get this straight: China, Japan, and now very much openly Russia, the three countries with the largest financial reserves in the world, are threatening, if not already dumping US bonds, just in time for US households to sell their holdings of US paper to Brian Sack. And this is happening 2 weeks before QE2 ends... Um... Are we and Bill Gross (and certainly not Morgan Stanley) the only ones to see a problem with this?

More on the latest confirmation that the time of US superpower supremacy has ended...

Asked if U.S. debt was as solid an investment now as it was 10 years ago, Mr. Dvorkovich said: "On an absolute basis, yes. On a relative basis, compared to other investments, of course not."

"When we take decisions and compare, we're not thinking in absolute terms," he said.

Russia's financial reserves—which stood at $528 billion as of June 10—are the world's third largest, after China and Japan's. As of May, according to Russia's central bank, 47% of reserves were in dollars and 41% in euros, compared with 45.2% in dollars and 43.1% in euros on Jan. 1.

The central bank recently diversified the stash to include the Canadian dollar, which makes up 1% of the total, and plans to put 0.8% into the Australian dollar starting in September.

And next, presenting the monthly status update of the second cold war, which is now held entirely between central bank trading accounts. Russia has now cut 30% of its Treasury holdings in the past 7 months. When the caption above the blue thingy hits zero, the "Evil Empire" wins.


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Manthong's picture

They were smart enough to establish a 13% flat tax a while ago. too.

ZeroPower's picture

Russia doing everything possible to bring America to ruin. Nothing new here. 

Moscow is quite the story and an up and coming financial center for CEE, but the corruption prevalent there is a huge deterrent. Still prefer USD over the RUB - market sentiment compliments my thoughts.

lolmao500's picture

Russia is doing everything it can to bring America to ruin? Are you joking? I'll remind you that it's not illegal to sell worthless US treasuries.

If you want to know who's bringing America to ruin, look no further than Washington DC and their banking buddies on Wall Street.

ZeroPower's picture

I suggest you look into world politics going more than, oh, 5 years. The cold war was just the tip of the iceberg. Russia wants to be a - no, the world power, and the USA is standing in its way. Pretty facetious that you didnt realize what i was alluding to, besides the mere financial aspect of holding a country's debt which is inevitable as the reserve currency (still) belongs to the USA.

Use of Weapons's picture

Hmm, right. You should be aware that the Russian road system is currently falling apart, and a major bitching issue - before 'taking over the world', I think 98% (including those with Mercs) want the pot-holes fixed. Srsly - do a poll, the person who fixes the roads will win an election.

You'll find that (many) Russians are attempting to create a stable, prosperous and modern nation out of the rubble of the ruble [1995/6 crash, eh?] and sort their shit out. Dreams of 'world domination', given the strategic weakness of Siberia aren't on the cards. Don't forget that oligarchs were created by your CIA (BIS?) dumping credit lines not into institutions, but into private pockets, which allowed mass concentration of wealth. The benefits of that compared to the deficits are debatable elsewhere.

However, when you see shit coming from Moscow, just remember who prevented nuke decommissioning and so on, and who is still attempting to have a monopoly on world money:




Those Rose Tinted Spectacles - LSD is a damaging thing.

sun tzu's picture

The Russian roads and infrastructure have always been horrible. That was their saving grace in WWII. Just because their people want nice roads instead of empire does not mean it will happen. Most Americans don't want an empire and constant war.

Is it possible that both the USA and Russia want world domination? I think so. Putin is no angel. 

The Russian oligarchs are former KGB and military. They aren't a bunch of tools and puppets easily controlled by the CIA. You give the CIA too much credit. They can influence third world rebels and despots in Syria, Cambodia, and Lybia. It's not so easy to push around hardened former KGB and Red Army officers.

Use of Weapons's picture

Yes, sorry - I'm aware of that; I should have added "indeed, the CIA (or whoever gave the slush funds) felt more comfortable with opposites they could understand (and had worked 'against' for many years), and in many ways, actually created a 'new' bi-polar situation to stave off redundancy. When this failed to materialise, the WoT and Islam rose to the challenge".


I was being literal & metaphorical - Russia needs to spend 5 - 10 years sorting out internal infrastructure / lifestyles / economy before "taking over the world" - they're well aware of the BRIC ascendancy, and are spending their natural energy resources wisely. Or should be. Likewise, nationally, there needs to be a new awakening and drive - and a big effort to stop the huge amounts of cheap afgan heroin being flooded into the country wouldn't hurt.

longontents's picture

THE world power?  Evidence for that assertion?

Urban Redneck's picture

Russia is doing everything it can to end USD hegemony in global trade and finance.

Russia is doing everything it can to to increase its national wealth influence over world affairs.


Then there is the whole ownership of the North Pole, and more importantly resource exploitation of the Arctic Circle and the wealth created thereby...

It's funny how people stop taking a nation as seriously when it defaults on its debt, as when Russia did a decade ago.  It also explains why certain States are murmuring that the US is already in default on its debt by devaluing its currency.  This chorus will get louder...


Coke and Hookers's picture

Just because they don't want to lose 170 billion by lending it to a failed state doesn't mean they want to bring it to ruin. They are just thinking about themselves, as they should.

Maybe they are also deterred by the corruption in Washington and on Wall Street.



Sudden Debt's picture

Russia is just thinking about their own money.

What would you say if it was the other way around? You would be saying the US should sell it.

But now it's Russia that holds the cards, and it's very logical they will do this.

I would sell to.

dracos_ghost's picture

But Russia defaulted in '98 and now they are in the cat bird seat. They have a lot of balls criticizing anyone else's debt.

Maybe the US should just default like they did and get it over with.


Sudden Debt's picture




Coke and Hookers's picture

If I remember correctly, Russia only defaulted on domestic debt, not foreign. And yes, the US should default now - while there are any assets left in the country that the Federal Reserve hasn't appropriated on behalf or their bankster masters.

karzai_luver's picture

let that be a lesson to you.


why don't the :let the market clear: fools get this part.

default == clear.



Coke and Hookers's picture

Ohh and I forgot to mention that the US is actually defaulting right now - by intentionally devaluing the dollar. From Russia's point of view, the devaluation is equivalent to the US Government stealing their money. Russia's point of view is the right point of view. The US is being run on stolen wealth now - stolen from foreign and domestic savers and future generations. The US is basically a giant Mafia now operating on shakedown money.

Bindar Dundat's picture

Double BINGO!   get it over with for goodness sakes.


Bindar Dundat's picture

Double BINGO!   get it over with for goodness sakes.


ZeroPower's picture

I agree that the next few strategic moves belong to Russia - question is whether or not they will play them right. Who cares if Russia offloads a few $Bn of debt. The Chinese will just as quickly snatch that up. If not the Chinese, India. And etc etc.

The fact of the matter is, countries are slowly diversifying from having all-USD and all-EUR reserves into some other currencies which are slightly more attractive. The quagmire comes in the fact that no other currencies besides the main 4 (USD EUR JPY GBP) are anywhere near as liquid as required to be able to efficiently diversify a CBs holdings. And of the 4 mentioned, all are pretty much shit with their own set of problems. So, perhaps im leaning more and more towards the doomer's views here on how fiat will soon die - or perhaps im hoping for a miracle in the CHF CAD or AUD to step in and take a larger part in worldwide FX markets. I dont think the USD is ever going away, because if it was looking for a precedent (JPY or GBP) then we all know that has not happened before in similar circumstances. Also, w/r/t default, the US is not Argentina or Chile or Iceland, where, respectfully, those defaults had little to no impact on the overall scheme of world currency markets save a horrible borrowing rate for a few years as a form of slap on the wrist.

XPolemic's picture

perhaps im hoping for a miracle in the CHF CAD or AUD to step in and take a larger part in worldwide FX markets

I doubt it:

Swiss GDP: 492B

Canadian GDP: 1.3T

Aussie GDP: 1.1T

Those economies are just not big enough to take over USD or EUR and both CAD and AUD are commodity based economies.

CNY is issued by a communist state.

I would be leaning towards a currency basket or gold/silver or perhaps a combination of the two.

When it comes to economics: SIZE DOES MATTER.


ZeroPower's picture

Yup, right on. I didnt feel like retyping from a post a few hours ago but exactly, it would take some major MAJOR event to increase those countries currencies to the liquidity necessary to be even considered a major currency in FX.

CNY however, as long as that dreaded peg can be removed in the near future (it was removed till CN got the financial crisis excuse in 08 to re-peg), might indeed be something interesting for future reserve status. 

XPolemic's picture

CNY however, as long as that dreaded peg can be removed in the near future (it was removed till CN got the financial crisis excuse in 08 to re-peg), might indeed be something interesting for future reserve status.

Problem is that the CN financial system is far too opaque, and even the central government is not really interested in the CNY becoming the world's reserve currency, they would rather someone else do that so they can buy bonds in that currency and send whoever has that currency cheap plastic toys and pretty much any other low end manufacture.

Talk of CNY becoming a reserve currency within China is just jingoist fluff to keep the extreme nationalists feeling happy.

As for 'pegs', doesn't the US Federal Reserve peg the USD when it sets the risk free rate?


XPolemic's picture

Aren't they crossed against the USD?


Arius's picture

"Who cares if Russia offloads a few $Bn of debt."

Zeropower - listen to one post you say russia is trying to bring down the US in the next post you say who cares about a few $Bn....which one is it?

get over it ... this is not about the world politics exactly (if that was the case why would russians buy the treasuries in the first place)...and most importantly, when you talk about trillions, russia really doesn't matter...


The take away message to me is that if Russians can see the end of the line thats not a good sign because they are not exactly the best in this business... or ever will be for that matter... so if even they are selling most likely there are not many left beyond to hold the bag...

Urban Redneck's picture

Russia was among the first (and the loudest) to jump ship on GSE debt when they were nationalized. 

Given that Bernanke needs buyers of US debt to avoid/delay QEnext- it doesn't bode well for Treasuries benefiting as much they previously have from being viewed as a safe haven parking lot.  So that only leaves required regulatory capital (both Basel III and D-F) to drive purchases among regulated FIs.  Then Bernanke has to either fire up the presses or watch a bond market implosion.   

ThoughtCriminal's picture

"Russia doing everything possible to bring America to ruin."

No worries, US "government" is doing a good job of this already. 


Savyindallas's picture

How about 'The banksters are doing everything possible to bring America to ruin. Nothing new here."  if you have followed U.S./Russia since the end of the Cold war, you would know that even when Russia was acting in good faith, the U.S. and the International banksters who control the U.S.  -were doing everything to enslave and crush russia. Can you blame them if they respond in kind.  

gwar5's picture

Won't be long before Timnanke remembers all the IRAs and 401ks just sitting around doing nothing. The public pension cookie jar is already being tapped, and nobody complained... so why not?

Wait. I know, how about the Social Security Trust Fund?  Oh... never mind....

Cdad's picture

Nobody could see this coming.  No one...not a single bipedal humanoid could guess that Ben Bernanke's perversion of the bond market would cause real capital to refuse to participate.  Nope.  It has been an impossible conclusion to reach.

But I understand that Ben Bernanke is 100% positive that the Federal Reserve Bank could extract itself from all of 15 minutes.  

Unfortunately, the 60 minutes reporter to which he said this did not bother to ask the logical follow up question of, "How?"

And now next week, we will be treated to all kinds of other such central bank revelations about Greece, Ireland, Portugal and the rest, as well as their pontifications about our own situation in the US via the FOMC.  Great!

Until such time as these criminal syndicate Wall Street banks are broken up [including the Fed], the Greater American Depression will real capital will not form under such idiotic and corrupt financial leadership as ours.

rufusbird's picture

"Unfortunately, the 60 minutes reporter to which he said this did not bother to ask the logical follow up question of, "How?" 

Prompts one to ask "Why didn't he ask the question?" doesn't it...?

I just figured out the answer to my own question. He did answer the question and either they both started laughing or the answer was so embarressing or lame that they edited it out...

sun tzu's picture

Journalists are fucking idiots and/or corrupt as politicians

rufusbird's picture

It also occured to me after my comment that the Ben is well know for not giving interviews. I am highly confident that he did not give the 60 Minutes interview without first obtaining a rights to review and omit. He was suppose to look good here. To most of the Mass media TV audiences he probably actually did come off well.

I watched a few videos last evening and just woke up troubled by them. This one illustrates why..."musicals..."

The Aviator's picture

We had better hurry up and spread the silver message to the masses before the collapse arrives and most of the US is left pennyless.
We all need to join the Silver Viral Project and take silver viral!

Sudden Debt's picture

Everybody should cover his own ass. I don't even bother anymore.


mynhair's picture

Always wondered who bought those assless jeans.  Thanks for clearing that up!

spinone's picture

+1. There's no cure for stupid.

richard in norway's picture

i thought it was phisical silver we needed


can you eat viral silver

Rodent Freikorps's picture
Population: 142,905,200 (2010 Russian Census) Growth rate: -0.06% (2010)


Zombie Russia

Sudden Debt's picture

Zombie Russia:

Has one of the largest Oil & Gas & Mineral deposits in the world.

I also has the most farmland in the world.

To bad for them he?


Use of Weapons's picture

It had a whole lot more rich loam before Chernobyl.

Tom_333's picture

Russia...(not the former Soviet Union) spans 11 timezones...large parts of western Siberia are not even propely explored.Chernobyl is a drop in the proverbial bucket.

Hulk's picture

I remember a few years back when Putin had held fuck camps. Now I know why...

mynhair's picture

Well, looks like King $ only has a minimum of 70% more to fall.

Very bullish for the pig Market.

Nolsgrad's picture

Meh, it's only 125Bln on 14Trln....

besides, The real worry should be have you studied up on those survival skills?

blunderdog's picture

47% of reserves were in dollars and 41% in euros, compared with 45.2% in dollars and 43.1% in euros on Jan. 1

Doesn't this say Russia is shifting *more* money into dollars relative to Euros?

Or is this supposed to be a distinction between "dollars" as a cash option and treasury bonds.  (That seems really unlikely.)

Tyler Durden's picture

They are adding USD-denominated reserves and selling Treasurys.

blunderdog's picture

Nice.  Why then that could be downright BULLISH, by Jove!