December TIC Data: China Treasury, Agency Sell Off Continues; UK Buying Spree Relentless
There is little that can be said about the December TIC data, as all the same (troubling) trends continue. In summary, net foreign purchases of long-term U.S. securities were $76.8 billion.
Of this, net purchases by private foreign investors were $66.3 billion,
and net purchases by foreign official institutions were $10.5 billion. The bulk of purchases was Treasurys at $54.6 billion, and $10.2 billion in corporte stocks (a fourth straight monthly decline), with token purchases of both Mortgages and Corporate bonds. Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $41.8 billion. Yet the most notable data continues to be the interplay between the formerly largest holder of debt (soon to be third), and that locus for bond laundering- the UK. Total Chinese holdings declined by $4 billion, as a result of $9.4 billion in Short-Term debt declines, offset by Long-Term purchases. China continues to dump agency securities like there is no tomorrow, and December is the 6th month in a row in which China has seen its agency holdings decline, but that should come as no surprise to anyone: after all they made it somewhat clear they are on the verge of liquidating the bulk of their GSE holdings recently. On the other hand, the "UK", which is either the Fed's "direct bidder" bond bonzi scheme, Chinese indirect purchases, or recycled petrodollars, just can't get enough of US debt: in December UK holdings increased by $30 billion. It has gotten so bad, that at $541 billion the "UK" is now just $350 billion away from China's total holdings ($892 billion). And Japan is now just $8 billion behind China in total US debt holdings! Of course none of this matters: The Fed will soon be more than double the next two holders (China and Japan) combined, with all the interest collected on the Fed's debt to be promptly converted to Treasury "revenues."
Breakdown of international flows by month:
And the only chart here that matters: