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Selling Of Treasuries Continues By China And Japan As UK, Oil Exporter, Hedge Fund Holdings Jump
The first just released TIC data, post the latest major annual revision, indicates that the two biggest holders of US Treasury securities continue to pare their holdings. We will present a more granular look shortly as the revision has made all historical numbers irrelevant, however the consolidated picture demonstrates that China sold $6 billion in USTs going into January, with Japan paring just slightly, at $1 billion. This was more than compensated by accumulation by the three other major players: the UK, Oil Exporter countries, and Caribbean banking centers, a proxy for hedge funds, whose holdings grew by a substantial $28 billion, $11 billion and $15 billion, respectively. The UK, which is most certainly a proxy for China, has seen its holdings grow by $100 billion in 4 months, from $106 billion in October to $206 billion most recently.
On the chart below, it is sufficiently obvious which is the UK holdings data series. China, without doubt for political reasons, is now funnelling the majority of its incremental US purchases strictly via UK-based proxy accounts.
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So the US absolutely does not have anything to worry about, one way or the other there are plenty of debt buyers anyway. Unlimited Magic Credit Card is working :)
China wants NOT to be in the public focus and seen as responsible for crashing the bond market. They reduce their official holdings just very slightly and balance it out via their new UK (stealth) holdings.
Once they start dumping their UK holdings, they hope not being held responsible for getting out of the market and having crashed it.
Clear & Simple !
The question is:
If they assume that the world cant see the setup and that plan itself, how much more NAIVE are they in other regards !
CHINA, HELOOOO ?
What if the art of war has been understood already worldwide ?
Yes we can as well !
Time is running out as such gimmicks are just minor noise by now.
Smart money sees the story and will AGAIN frontrun China.
Its the arrogance that makes these people weak and so predictable !
+1
China is so predictable, its laughable !
If foreign sovereign buying continues to significantly decline, zh and others should be able to draw conclusions on the remaining portion (i.e. any Fed-shaped shadow channels it may be disappearing into).
Although it's unlikely that more than a fraction (of a single percent) of the Chinese people will hear about this.....Still, it must shock the hell out of The Party that someone noticed this & published it.....this just doesn't happen in China.
Unless it is the Fed buying the USTs, there is NO WAY the CIA or FBI would not know who the ultimate buyer is (for whom the UK acts as a proxy). The reason the buyer is kept undisclosed is just because it is in the best interest of the US Government, otherwise Mr. R. Murdoch would have told the world about it. Do not be naive, please.
Agreed.
You're In Safe Hands
March 15 (Bloomberg) -- The U.S. and the U.K. have moved “substantially” closer to losing their AAA credit ratings as the cost of servicing their debt rose, according to Moody’s Investors Service.
http://www.bloomberg.com/apps/news?pid=20601068&sid=a8c_1vtVGzD8
"The UK...is most certainly a proxy for China...."
With China reducing its Treasury holdings, as has been recommended by the PLA among other powers that be, I question your assumption that China is buying in a "stealth" manner through the UK. The country's existing holdings are so vast that a reasonable investor would want to diversify--not concentrate--its risk.
Since both the US and the UK have been involved in quantitative easing (and are likely to continue doing so), I would suggest that the UK purchases are those of the Bank of England supporting the actions of the Fed. And vice versa...as in a circle jerk. These two partners in crime (remember Iraq?) need one another.
From Asia Times Online:
Depending on the pace and scope of China's forex reserves diversification strategy, this trend will have broad implications for the internationalization of the yuan and China's US$2.27 trillion forex reserves, which are mostly parked in US Treasuries.
http://www.atimes.com/atimes/China_Business/LC11Cb01.html
It is difficult to disagree with this point of view...
I think the central question is how in the world can the UK be net buyers enough to fill in the void... when they have their own acute "debtor nation" issues.
I agree with the "circle jerk" reference, though I wonder to what lengths the UK can actually perpetuate it.
I can see the creditor oil nations as a net supplier... but I'd also think they would/could work for a higher competitive yield for new issues.
I'm probably more confused by the rest of you guys on the data, though.
I would think that oil sales account for a larger part of revenue than treasury maturing treasuries since production is still near an all time high. They would like inflation right now and they way to promote it would be to sponsor the USG's direct buying of the market and their sponsoring of the expanding ponzi.
UK are masters of the ponzi and they can keep buying UST even if they are bankrupt three times over.
UK = US = Fed
Yeah I was going to say, don't the same people who own the Fed also own the BOE?
Yes, they do, and I would suggest that the reason you are seeing such a huge spike in US debt purchasing right now is because their advisors are warning them that the £ is on very, very thin ice, and it would be good to diversify the bulk of ones wealth to bridge the gap of a sudden devaluation of sterling.
With this dynamic China has nothing to gain by buying. They know that cartel can't allow rates to go up while there the huge sucking sound total credit disappearring persists in the background. They know that whatever gap in tres purchases they might not fill will be filled by clever money creation of the cartel. Each extension of the ponzi (clever money creation) affects their holdings negatively while improving their GDP by increasing exports. It is a fine balance where they must not leave the whole too big but at the same time keeping their exports ever higher. Seeing as diversification is the long term goal and good labor market the primary short term goal, a bit of selling makes sense.
I have no idea, but could the BIS be somehow involved in this? After all it seems to work like the central bankers dark pool.
Sorry Tyler. I'm afraid you're wrong on both. They're both a proxy for the Fed. Stealth monetization anyone?
Have to agree with you GG. Because the whole reason for the saber rattling between China and the US is they don't want our debt. So why would they buy bad debt secretly? They are two heavily into US debt as it is now and need to diversify.
Oops, could be the case. Monetize silently through the UK and Caribbean, blame on China and the hedge funds when (if) it's time to blow the bubble.
And attack Japan through Toyota, at least for starters.
Agreed. Makes much more sense.
Did we not use the UK intelligence apparatus to spy on American citizens during the Bush years? I agree that assuming the UK funds are buying for China is a stretch. Stealth monetization - covert QE - is behind this.
As I said here before Chinese view on the dollar and US debt has changed over the last two years. That much is clear from Chinese language media. They don't want to rock the boat by dumping US treasuries since they still enjoy a large trade surplus. But they know adding to their already huge treasury holdings would not do them any good, either strategically or tactically.
The only scenario under which they would buy more US debt is for the US to concede in other areas, such as technology sales. These under-the-table concessions could be made, but they are likely to be reported in China as a victory and glory to the party. Unless and until we hear such news, we shouldn't believe China's secretly helping to devalue their own dollar reserves.
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