This page has been archived and commenting is disabled.
TIC Data Confirms China Bond Sell Off Continues; Foreigners Dump Corporate Bonds And Stocks
Today's Treasury International Capital data had some unpleasant disclosures about the flow and size of international capital flows. The gross headline number of inflows was as expected higher, coming in at $44.4 billion, consisting of $33.9 billion in net foreign purchases of long-term securities ($16.6 billion purchases by private investors and 17.3 billion by official institutions), as well as $10.4 billion in sales of foreign securities by US individuals. This brought total foreign holdings of US securities to just over $4 trillion for the first time ever, or $4,009 billion. So far so good, however looking at the composition of purchases, it appears that foreigners were frontrunning the Fed already in June - they bought $33.3 billion in LT Treasuries, and $18.2 billion in agencies, precisely the categories that the Fed would be monetizing, even as they sold $13.5 billion in corporate bonds (the highest amount since January 2010), and $4.1 billion in corporate stocks, the most since July 2008. What are foreigners seeing that all the mutual funds are also seeing (with 14 straight outflows from domestic equity funds), yet the HFT, Primary Dealer group is so stubbornly ignoring? Most importantly: Chinese Treasury holdings dropped to a 1 year+ low of $843.7 billion, following reductions in both long-term and short-term treasurys. China now has almost $100 billion less in USTs compared to the peak of $940 billion in July 2009. One wonders what China is buying with the sale/maturity proceeds.
Below is a chart of the monthly foreign flows by category: after foreign LT purchases surged to a gross record of $159 billion, this number has sine plunged to a mere $33.9 billion. Also note the accelerated selling in corporate stocks and bonds by foreigners.
Focusing on the Big 3 foreign holders, below is the concerning chart showing China's declining holdings:
And the actual monthly flows: note the last two month of outflows.
Luckily, Japan has not been spooked yet: the country purchases a total of just under $17 billion in Long and Short-term Treasurys:
Obviously the covert activity via "UK banking centers" continues, as the UK continues its surge in UST holdings, now at a stunning $362 billion, compared to $91 billion a year earlier.
And a few other observations: it seems several European key banks saw a material expansion in their UST holdings, specifically Switzerland and Luxembourg, which increased their total holdings by $15.7 billion and $21.2 billion, to $100.1 billion and $97.5 billion, respectively. The other notable seller: Oil Exporters, which dropped their UST holdings from $235.1 billion to $223 billion.
»
- 9040 reads
- Printer-friendly version
- Send to friend
- advertisements -
GOOOLD BITCHEZ!!!
if someone bought gold somewhere for 100bil wouldnt we know it already ??? is there that much for sale somewhere ?
If China bought gold they would not announce it until much later (if ever). China has done this in the past. Remember, they are seeking to win 'the war' without ever firing a shot.
10 year bitchez!! Yielding an epic 2.58pc.
We're near the March 09 low area and at this rate we'll be breaking the Oct 08 record low pretty soon. SPX should be trading around the 650-700 range given the signals being sent by the bigger, badder bond market.
Goes to show you... whenever the Fed is buying something, you should be selling it to them.
I think we should offer Taiwan to China in return for debt forgiveness. Everyone wins. Except the Taiwanese, of course, but, hey, two out of three isn't bad.
how about we trade obama as messiah aka top priority everything and beautiful michelle as a bride to the highest bidder
You can't give China what they already (think they) have.
But you can recognize them as a regional hegemon, and withdraw the troops you have thee.
If Obama doesn't first decide to let them have it in return for nothing that is - sort of like how he took the possibility of nuclear weapons deployment off the table in return for nothing.
When he grants US citizenship to tens of millions of illiterate S. American peasants I think he will at least be expecting them to go out and vote Democrat for what remains of the nation's existance as a going concern...so I guess it's unfair to say he has no deal making skills.
China already owns Taiwan. They don't need to ask anyones permission to take it back. The financial and genetic ties between the two countries already guarantee the two will be rejoined in the future.
When the Nationalist army invaded Taiwan they executed over 100,000 of the Tawainese elite. Seems the Nationalist generals wanted the houses and busnesses of the Tawainese elite. This was all done with the knowledge of the US military. A similar fate befell many in South Korea who disagreed with the ROK military.
Anglo repatriation bitchez.
7 year duration bitchez!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
However, there's no doubt the so called treasury bubble will inflate some more and run Taleb to the poorhouse...
That explains the treasury rally. :/
+1
Everybody is front-running the Fed. My golly, who could have seen that coming?
</sarcasm>
Well played, Mikla....
why couldn't the ECB simply be rolling the swap lines into Treasuries?
ZH says "...One wonders what China is buying with the sale/maturity proceeds...."
Well they are not buying as much USD (or?). Isn't that what the House wants...an appreciating Rmnb?
Sell Taiwan to China against Taiwan's will; that gets the mind twisted up in knot (although the logic is there.)
Good luck selling them something they believe they already own.
I'll let you keep your pants for $5. Deal?
Your comments are 10 years out of date. The financial and genetic ties between the two countries already guarantee the two will be rejoined in the future. The business communities in both countries call the shots. They both have hundreds of billions invested in each others countries. Taiwan has become too expensive to manufacturer many goods and are dependant on China for workers as well as investment. Inthe future Tawain will look to China for protection from Japan and others including the US.
curious, how exactly is japan a military threat to taiwan or china? japan barely even has a military. i dont recall it ever threatening anyone since the us bombed it.
also, i thought there was significant difference in genetic and language between taiwan and china. actually, before the chinese civil war the taiwanese were a seperate race and culture, like tibet.
Japan is in competition with China, India and everyone else for resources. It will be forced to pump money into it's military to keep the resource pipeline open.
When the Nationalist army invaded Taiwan they executed over 100,000 of the Tawainese elite. That put an end to the independance of the native Tawainese clans. Many of these Taiwanese were decendents of the Japanese who ruled Taiwan for 50 years.
japan hardly has a military to pump money into; they seem to work more on relationships and the bribe as you go system to get what they need. They are also good at economizing unlike the chinese who seem to want to copy the americans in wasting resources to prove they are rich.
Japan occupied Taiwan, what, more than 60 years ago? And their army was wiped out for the effort. I dont think they can do it again, especially with so few young people now. Even still, most of the Taiwanese I meet like the Japanese and Japanese culture, unlike the Chinese and Koreans. Anyway, I can see japan as a competitor to china but not a military threat. if anything with chinese subs off the coast of japan the chinese seem to be the ones doing the threatening these days. The chinese have damned the mekong killing off the lao and vietnamese who live off the river, they threaten to invade anyone who gets in their way, etc., etc., I dont see that kind of behavior coming out of japan.
"Obviously the covert activity via "UK banking centers" continues, as the UK continues its surge in UST holdings, now at a stunning $362 billion, compared to $91 billion a year earlier."
Stealth monetization by Fed - or offer another explanation that is more plausible for that kind of money.
And we are green.
One wonders how Mutual Fund Monday works with net outflows for the last 14 weeks.
To complete the Monday morning trifecta .....ARS doing math.
pppfpftttt....
Thanks I needed that.
China's Inter-Company Lending Ponzi Dynamics
Funny how this clown never mentions Irahell would sink into a hyper inflationary spiral without US aid....
The pump machine is back from vacation, and I'll bet the stupid retail, back from vacation, hs been suckered into believing this is the buying opportunity of a lifetime. Just like 03-04, 09 etc. Pour some more money down that 'ol black hole Joe... NoNo, I'll bet we get net inflows next time, no doubt.
CCTV (China) top story is the US Naval Ships in Da Nang Vietnam. Also with the war exercises in South Korea near to China mainland it is making major news in China while in the US gay marriage is the top story.
The US is sending a message to China, I wonder what is going on at the top levels. Dumping Treasuries, perhaps planning on a new reserve currency with other countries. The US debt downgrade, the ex Central Bank head saying they wanted to dump more US treasuries but could not.
It will be interesting to see how this develops.
it's awfully hard to build a modern navy without massive stockpiles of iron ore......
If the US Navy decides to go the pirate route to keep India and China from growing, there will be a huge backlash by the commodity exporters. Exporters will build carrier killing misslles and subs to deliver them. The US Navy will be rendered impotent. In fact Brazil is designing nukes and subs to deliver them now to protect it's oil fields.
Can you imagine the stink if the U.S. just decided outright to default on Chinese owned Treasuries? You know, before the Chinese had a chance to dump?
And with the whole yield curve shifting down, you'd wonder why the Chinese couldn't dump much more... or perhaps in the past 6 weeks, they have.
The UK buying is mainly hedge funds and the middle east.
ZH says "...One wonders what China is buying with the sale/maturity proceeds...."
Real estate in Australia and Vancouver, Canada...
Oil ...
The bonds of commodity producers.
Africa
Uramium. And American-made fuses via Russia.
Clearly, that's just a wild guess.
This article in Bloomberg today:
http://www.bloomberg.com/news/2010-08-16/china-economy-passes-japan-s-in...
How about the world's no. 1 bubble blowout?
People who game the system, hate it when their own system gets gamed!
ORI
http://aadivaahan.wordpress.com
The Europeans are now bigger importers of Chinese goods than America. At the same time, the Yuan has dropped about 1.75% to the Euro so it makes sense that while the Chinese see ever increasing data that Americans are switching from spending to saving, the Europeans with a strong Euro have not, and continue to buy cheaper Chinese imports. European, especially Spanish and Portuguese ties to Latin America, a major Chinese focus, are strong and potentially important.
Accordingly, China was rumored to be a big buyer of both Euro bonds and Euro$ to protect their exports to Europe. One theme that is coming back into discussion is that survival is the main goal of the Chinese regime at this time. So along with keeping people employed at whatever cost, they are also doing a little sword rattling with the US over the recent naval exercises with S Korea. Some also expect that the Chinese are ready to go back to cheap money as needed and continue to devalue the YUAN versus the Euro.
Is one of the things that Morgan Stanley is betting on for their 'steepener' a prolonged decrease in Chinese participation in the UST 10-30yr auctions? Do they think that as that information becomes more focused on by the market, traders will begin to get heartburn about the level of supply? It was CIC that came to MSs rescue in 2007 and some people are saying that MS has inside info on Chinese intentions.
Or, was the lack of buying that we saw fromChina nothing more some reserve diversification and a normal reaction to decreased US trade flows?
"Americans are switching from spending to saving"
You cannot be serious. The sales of consumer goods has not dropped significantly. A 4% savings rate is beyond pathetic.
Wild guesses here, but the obvious answer is : European bonds. Anybody recalling China buying Spanish bonds last month in the London auctions ? BNP Paribas got hit pretty badly on the their EUR/USD parity call.
The pure annuncement of China purchases gave European bonds a booster.
Okay... so... the Chinese are buying EU bonds... the EU is buying British bonds, and the UK is buying US bonds.
Makes perfectly good sense.
China with its $ 2.5 trillion of currency reserves is quietly
gaming the FX market. Japan revealed they had bought $5 billion worth
of yen in June, expect more in July, triple that amount of
for Japanese T-bonds, and have likely also "thwarted"
the euro
I believe the europeans buying more are doing it as a forex trade. Double whammy profit it treasuries go up at the same time as euro plummets.
Resources like the one you mentioned here will be very useful for me! I like to share it with all my friends and hope they will definitely like it.
virtual server hosting
windows 2008 vps hosting
mssql hosting
windows vps server