Chinese Treasury Dump Brings Its Total Holdings To One Year Low, As "UK" Continues Exponential Accumulation Of US Bonds

Tyler Durden's picture

We are a rather surprised that this morning's stunning Treasury International Capital report has not gotten far more prominent attention. The reason: in it we read that in May 2010, China dumped $33 billion in Treasuries, bringing its total to the lowest since June 2009. Furthermore, Japan also offloaded $8.8 billion in bonds, as did the Oil Exporters. Yet total foreign Treasury holdings increased from $3,957 billion to $3,964 billion almost exclusively as a result of ongoing exponential UK accumulation. It is time someone in the mainstream media asked just who is doing all this "UK-based" buying? It is not hedge funds, which operate out of Caribbean Banking Centers, and which saw an increase in holdings from $151.8 billion to $165.5 billion as risk went completely off in the month of May courtesy of the Flash Crash, Greece, and the general insolvency of Europe. It is also not China due to a diverging pattern in Bills accumulation versus disposition. Additionally, May saw a dramatic decline in total foreign purchases of total US assets, dropping from $110.3 billion to just $33 billion, with Corporate Bonds and Corporate Stocks seeing a rare monthly sell off ($9 billion and $432 million).

Below is a chart of total Long-Term securities purchased by foreigners monthly:

Notably, foreigners sold US Corporate Bonds for the first time since February 2009, after $432 million in bonds were sold:

So cutting to the chase, the key observations as always were in the holdings of the top 3 - China, Japan and the UK. As noted previously, China dumped $32.5 billion worth of bonds, which consisted exclusively of US Bills selling to the tune of $35.4 billion, even as the country bought a nominal $2.9 billion in Bonds.

The selloff has resulted in Chinese bond holdings dropping to the lowest since June 2009, and their Bill holdings, at just $7 billion, to the lowest ever!

But China was not alone: Japan also dumped USTs - a total of $8.8 billion, although unlike China, Japan sold $11.1 billion in Long Term Bonds even as it bought $2.4 billion in Bills.

Yet in what is (and continues to be) the most perverse observation, that proceeds without any questions from the mainstream media, the otherwise broke UK, once "bought: a stunning amount of Bonds, or just over $28 billion in the month of May, consisting of $27 billion in Bonds, and $1.3 billion in Bills. The "UK" accumulation patterns continues growing in an exponential pattern, and the country which owned "just" $180 billion in USTs in December, has doubled its holdings to $350 billion in less than half a year.

And here is the most imporbably chart we have seen in a long time:

This is not hedge fund accumulation, as Caribbean Banking Centers, traditionally the locus of HF accumulation saw a $14 billion increase in May, and if it is China, as is widely rumored, why was there an increase in Bill holdings? This is increasingly appearing as shadow Fed debt monetization operation, operating out of the United Kingdom. Hopefully someone with far more executive level access (NYT?) than us, will dare to challenge the status quo, and facilitate their credibility and book sales, by asking the right people the right questions to explain this confounding observation...

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J.Caesar's picture

never tickle a sleeping dragon - harry potter

Duuude's picture


Difenitely an imporbably cahrt.


Timmah !!!



johngaltfla's picture

Actually the expression is:


"Never pee on your central banker's leg and tell him you're watering his flowers."

Cookie's picture

Yes NYT, pull your finger out for once

BobWatNorCal's picture

"Hopefully someone with far more executive level access (NYT?) than us, will dare to challenge the status quo"
I think the NYT has groveled its way into the status quo. They're pretty shameless at framing agendas and averting eyes from stories that don't it the agenda these days....

midtowng's picture

You don't suppose something fishy could be going on, do ya? The big banks wouldn't be trying to manipulate the world's capital markets. That would be unethical.

buzzsaw99's picture

The UK has long been suspected (by me at the least) of being a proxy for the fed.

Quinvarius's picture

Airstrip one is populated with our proletariat slaves.



DaveyJones's picture

Dead on - you buy my debt and I'll buy yours, that way, we'll both have money

grunion's picture

Liquidating some missing gold?

Hdawg's picture

Rothchild's BOE of course

Tense INDIAN's picture

thats what i was thinking...

Cheeky Bastard's picture

Brick Top: It'll get you in a lot of trouble thinking, Errol. If I were you, I wouldn't do too much of it.

Cheeky Bastard's picture

Wow dude; I did not know this was 1875. Thanks for that.

Apparently the omnipotence of the Rothschild's knows no border. Say; did the Rothschild's spy network deliver Dow opening #s to Nathaniel before the FTSE Transatlantic mail ship could deliver it to other London Traders.

Heavy's picture

Huh, what's going on?  Oh, I see.  Where's my pitch fork?!

Pimp Juice's picture

Don't you remember that we have a "special relationship" with Great Britain? Obama hasn't given Cameron any DVD's yet!

Stepney's picture

Ah, so that is where Tony B'Liar and Gordon 'snotgoblin' Brownstuff hid all our money.

We'll send a little man round to collect it later. Thank's old chap.

kaiserhoff's picture

UK as in Baldy Ben.  Closing in on a tipping point as more folks catch on?

Dr. No's picture

If the UK suspects their currency is going to dive faster than the dollar, wouldnt it make sense to buy the bonds?  I mean its not like they are hard to find with so many being issued by the US of A.

Cognitive Dissonance's picture

The reason: in it we read that in May 2010, China dumped $33 billion in Treasuries, bringing its total to the lowest since June 2009.

It seems the smarter Chinese rats are leaving the dumber (or at least fat and happy) American rats behind. I've always been amazed when people would spout such nonsense about China being forced to purchase US Treasuries for as long as they wish to be a part of the global economy. How it's in their best interest to buy our crap US bonds.

China will always do what's in their best interest. If that coincides with America, great. If not, they won't. China learned during the so called Gun Boat diplomacy era that they never ever again wish to be in a situation where their best interest is determined by being on the wrong end of the barrel of a gun.

LoneStarHog's picture

I have also had to laugh at the China bashing and "...they need us...".

I had also stated over the past several years that China was accumulating a vast hoard of gold, which was proved to be correct.

I have also stated that China learned a lesson from the U.S. Gold Swaps (read Fort Knox).  I posit that they have taken this and applied it to their U.S. Treasury holdings by SWAPPING treasuries for commodities, mines, etc...things priced in U.S. Dollars.

Whatever few unencumbered remaining U.S. Dollar Denominated Assets are held, the losses of a declining dollar will be offset by the rise in gold.


DaveyJones's picture

Let's see they're accumulating lots of gold and just about every other hard resource in the world, building lots of oil alternative energy and water systems, they actually manufacture things and are not swimming in debt up to their nostrils but yeah they need us cause we have Leonardo DiCaprio 

Cognitive Dissonance's picture

If they take Leonardo, I'm going Chinese in a heart beat. They can take my dollars, my hard asset oil/gas/lumber etc resources, my PM's, even my wife. But if they take Leonardo, I'm renouncing my US citizenship, finding me a Chinese concubine and moving to China. :>)

Say it ain't so Leonardo, say it ain't so.

EscapeKey's picture

"I buy yours, you buy mine"

Ancona's picture

This is clearly stealth quantitative easing, just as the Carribbean banking centers purchases are. There just is not that much cash out there looking for low yield returns.



Quintus's picture

Man, you guys are so lucky that we in the UK continue to fund your country like this.  Now, about that BP business...

Of course it suits us too as there's so much excess money lying about over here that the banks have stopped putting pre-approved credit card applications through our doors, and are now just stuffing cash through the letterbox every day.

I don't know who's buying Treasuries out of London, but I can only imagine it's the Fed acting through intermediaries.

buzzsaw99's picture

Man, you guys are so lucky that we in the UK continue to fund your country like this.  Now, about that BP business...


Yeah, let's talk about it.

sbenard's picture


ECRI just hit -9.8% minutes ago.

It's a hair's breadth from calling a new recession!

Ragnarok's picture

I wonder if Bernanke has picked up an english accent yet?

NOTW777's picture

yeah but cnbc is celebrating "obama wins"

4shzl's picture

. . . just who is doing all this "UK-based" buying?


What do we know about them?

Nothing. They're stand-offish . . .


Gwynplaine's picture
Gwynplaine (not verified) 4shzl Jul 16, 2010 11:37 AM

I just hope this doesn't jeopardize the B-3 bomber program.

centerline's picture

I'd consider it a hedge against currency devaluation in light of what is going on.  BUT, that is simply too big a play.  Like going "all in."  So, if it walks like duck, talks like a duck...

lizzy36's picture

One can visualize  ARS asking "the right people the right questions,  as soon as he finishes swallowing.  

Paper CRUSHer's picture

So that's why HAINES 'n HOBBS are wearing their Country-Ties this morning to CNBC in an all out inexorable display of "UNITED STATES WE STAND UNITED KINGDOM WE FALL"


Instant Karma's picture

"This is increasingly appearing as shadow Fed debt monetization operation, operating out of the United Kingdom."


bigdumbnugly's picture

is there a bastille anywhere in the DC area?

i feel like a little stormin'.

Heavy's picture

Getttt yer pitchforks here!  I got pitchforks who whats 'em!  (and BTW what do you have in barter?)