China Sells Long-Term Bonds In October As Foreign Inflows Moderate, Fed Untouchable At Top Of US Paper Holders List

Tyler Durden's picture

The October TIC Data is out (although courtesy of the total and ridiculous redesign of the Treasury's website, is a complete nightmare to navigate). Net foreign purchases of US securities amounted to $54.7 billion, down from a revised $90 billion in September, and even more from $136.3 billion in August. Net foreign purchases, net of adjustments and US purchases of foreign securities, amounted to $7.2 billion, substantially lower than expectations of $51 billion. Digging through the data reveals some interesting trends, namely the purchases of LT Treasurys, while still positive, plummeted from purchases of $78.3 billion and $117 billion in the prior two months. The savings grace is that foreign purchases of Corporate Stocks remained relatively strong, at $16 billion. Looking at China we observe that the country actually sold off Long Term UST (while buying Short Term Bills): this means that the Fed, with its $966 billion in US paper is now untouchable at the top of all holders of US Treasurys.

The chart below presents just monthly purchases of Corporate Stock:

Most importantly looking at the detail in the purchases of the Big 3, we note an interesting development. While total Chinese holdings increased from $883.5 billion to $906.8 billion, more than all of this increased was in Short Term Treasury purchases ($25.4 billion), and in fact China sold $2 billion in Long-Term US Bonds in October.

and total Chinese holdings, spread by Long and Short-Term holdings

The second most important holder of US debt, Japan, bought a modest $13 billion in paper in October:

And as for the shadiest foreign buyer, the UK, which is a stomping ground for the mysterious "direct purchasers" and is either a proxy for China, US Bank, or indirect Fed buying, it was back to its old shenanigans, buying $19 billion in net bonds in October.

Most importantly, however, with October data behind us, the Fed is and continues to be the top institutional holder of US debt.

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Spalding_Smailes's picture

Ho hum ... Gold has traded sideways since oct 20th, but yet US Steel is up 2-3 % already today, 26% in 4 weeks .....

tmosley's picture

Captain Hindsight!  What should we have done!?

Spalding_Smailes's picture

I have been tell you all to buy US Steel since I bought at 44$ ....Lol' Come on TMosley you must have seen a post on US Steel over the last 4 weeks ....


Hindsight ..... Nope. Ride the wave .... Lol'

tmosley's picture

I wonder when you will wish that you sold?  I'll stick with the deflation in terms of PMs trade, thanks.

Political risk can be a bitch.  I don't even own miners right now.

At least you're not holding dollars.

Spalding_Smailes's picture

Sell some gold and buy (ZEUS) ...... another industrial play.

Dont tell me in 2 months I called this in hindsight. Its going to roll .....

Also I'm not anti- gold per say. Just dont keep all your cash in gold, take some out and hedge your bet. Buy a few stocks. I like the industrials in the USA they are launching lows. Cat mining is on fire & machine shops slammed in Chicago, suppliers of metal (ZEUS) have very low inventory, big plus for US Steel ...ect...

spartan117's picture

But, but, but... what if you bought at $180 back in 2008???  You're still down 70% if you bought during its peak. 

ECU Silver is up near 100% in the same timeframe as your X, btw.

potatomafia's picture

HAHAhaha, now THATS funny!!!

Spalding_Smailes's picture

I didn't, I bought at $44 will sell over $80. Book it. 2 years with of gold gains in a matter of months .....


Thats why those "S&P has not done a thing in 10 years....." or "gold up 20% per year since ....... " mean very little. Today is a new day.

tmosley's picture

What do you do if it doesn't make it?  Price controls aren't all that far away.

Political risk is a bitch.

Spalding_Smailes's picture

Just have some fun with 20% of your cash. US Steel is going over 70-100. With the dollar weak this also brings in machining work from all over the globe. Our shops are world class & becoming more competitive because of the forex trade.

EscapeKey's picture

Yawn. Another internet billionaire who only makes right calls.

Spalding_Smailes's picture

Look um up babe. RIMM at 42(sold at 48 & the rest at 55), US Steel at 44( I will sell at 80 & 100)..... Buy ZEUS also we will talk in 8-12 weeks.


I called US Steel real fucking early. You can still jump on it for an easy 30-50% ....


DECEMBER 15, 2010,-------Joy Global Inc.'s fiscal fourth-quarter earnings rose 18% as the heavy-duty mining-equipment company benefited from a weaker dollar, stronger margins and a surge in bookings.

For the new year, the company projected per-share earnings of $5 to $5.30 on revenue between $3.9 billion and $4.1 billion.

Makers of mining equipment have seen an uneven commodity rally this year. Joy Global in September said it viewed the global mining sector as in the early stages of a multiyear expansion. At the time, company executives saw a slowdown in demand as temporary, stressing that commodity prices remained strong and customers' interest in new equipment hadn't fallen off in recent months.

For the quarter ended Oct. 29, Joy Global reported a profit of $146.3 million, or $1.39 a share, up from $124 million, or $1.20 a share, a year earlier. The prior year included a $6 million gain related to its prior reorganization efforts. Revenue rose 8.9% to $1.05 billion.

Gross margin rose to 37.9% from 32.4%.

Confused Indian's picture

Tyler, dont you ever give up?

I mean Aren'tyou fed up with "the fed". We cant beat them. These numbers make no sense to them and they dont bother at all.


Then, why?

jus_lite_reading's picture

I don't know either. Until the world experiences a 1779 moment, nothing will change. The banks will rob the people with help from the gov'ts.


Amazingly, London is the fishiest place on earth- all bond traders know that. ME buyers with support ffrom the Fed

plongka10's picture

Tyler bears witness to the atrocities being perpetuated against humankind. More power to him in his quest to shine light into dark places.

Tense INDIAN's picture

i found this person very good with his analysis before.....and he is saying that the SHIT-WILL_HIT_THE_FAN   now anytime......he was one of the guy who warned the bears this year when everybody thought stocks will be down by September hes saying its game over:------>>>

KickIce's picture

This link gives a very good explanation to what China is doing.


But not to worry folks, we have Ben and Timmy.



wiskeyrunner's picture

We are all going to be slaves when all is said and done. The next step is to put someone like Bloomberg as president. When that happens the Federal Reserve will have one of it's own in the White House. All this heat Bloomberg press created on the Federal Reserve  with it's request for information is simply a ploy. This nation is being overrun with money worshipers. 

Confused Indian's picture

going to be?

You must be joking.

sushi's picture

Interesting data.

My initial take on the Chairman's actions was that he was imposing some crazed plan of his own design derived from his deep understanding of the 1930's.


Reading this data it becomes clear that the Fed had to step up and buy as there were few others with interest. The Fed had no choice but to buy, buy, buy.


Not sure anyone has worked out the end game. Once they own all the outstanding US debt and have bought Ireland, and Spain, what happens then?

Caviar Emptor's picture

The end game? We're in it: fully committed to insanity. Fully on the path to destruction of the middle class and preservation of holy banks at all costs. Political repression to be dispensed as needed to support the farce, including secret police if needed in the future.

lsbumblebee's picture

Free-market orchestra conductors have been attempting for the last several weeks to lure long-term bond money into equities and away from precious metals. It's sad really.

Caviar Emptor's picture

The Fed Perpetual Motion Machine needs a bit more oil. Quick, someone, get some oil!

Teddy Turner's picture

Why does the chart not show domestic holdings?

Confused Indian's picture

I am reay to partly sponsor anyone who offers to drop the bomb over next FOMC meeting.

merehuman's picture

We have some excellent US Army sniper teams. Will they see the domestic enemy?

Fortunes Favor's picture

If the Fed is the top paper holder than we all need to be the top Gold holders.

The Three Phases of Every Secular Bull Market in Gold – By Gary Rosenthal

Midwest Prepper's picture

The maniacal laughter in this video says it all...

Jupiter's picture


If I had bought back in 1998 and sold it in 2000, I wouldn't be writing this post.


bobert's picture

I used to get bothered by George W. Bush's

$150-200B annual deficits. $1.5T annual deficits

was previously unfathomable to me. Yet here we

are three years running at this level (including fiscal year

2010/11). I've lost track of the bailouts, and

handouts. Anyone have a quick recap of where

the extra $1Trillion is being spent each year?

mark mchugh's picture

81.6 Billion in revisions, if I read that right.  Does that concern anyone besides me?

I really am confused.  Do most people?

a) Think our Treasury auctions are real and legit.

b) Know our Treasury auctions are completely fictitious.

c) Not give a rat's ass where the money comes.



Jake3463's picture

Watched Morning Joe this morning.  They kept talking about the tax cut/ Stimulus 2 would all come from borrowed money from China.  Kept thinking, nope it will be printed out of thin air and the price of gasoline will be $5 this time next year.

financeguru500's picture

People who think we still get money from China are simply retarded. They are riding the mass media train and singing with their tune. It is easier to demonize China than to realize we are creating our own problems and borrowing from ourselves.

Jake3463's picture

Well on trade tactics there is plenty to demonize.

Of course we have legal ways to combat those and penalize those.

Americans choose ignorance.  I did myself till the financial crisis when it suddenly dawned on me that my function as an auditor and one with financial compliance experience was totally irrelevant because the government would punish no wrong doing anyway.


Gas hits $5 a gallon Americans will want some explanation.  It should be entertaining if it is speculators and not inflation as the culprit. 

spekulatn's picture


According to pragcap, Gundlach feels the US is headed toward deflation in the next 2 years. Buy bonds, sell stocks.


I'm so confused.

DaveyJones's picture

so the bankers really DO own the government

Hard1's picture

By far the most important thing happening in the world financial markets is that China wants out of it's 900 bln UST trade and the only one whe can accomodate that in their book happens to be the Fed.

TruthInSunshine's picture

To anyone who thinks they will own more US Bonds than The Bernank, a message from the Chairman:

g3h's picture

There are some savvy fund managers in China.