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UK Treasury Holdings Surge, Artifical Demand Offsets Chinese Decline In Holdings
The Treasury has just released the latest TIC data: we will provide a full analysis later, but here are the key observations. Total foreign holdings at the end of February increased by $44.4 billion, however this was not thanks to China. Mainland China sold $11.5 billion in total Treasuries. However, the components of this number were primarily due to ongoing sale/roll off of Bills, which holdings decreased from $58 billion to $42 billion. At the same time Long-Term Chinese UST holdings increased marginally from $831 to $836 billion.
Of the top three, Japan barely added to its total UST holdings, which increased from $765 to $769 billion. Just like China, Japan allowed more Bills to be sold/roll off, while adding Long-Term debt, $8.1 billion to be precise.
Yet the biggest surprise continues to be the UK, which is certainly the nexus of whatever shell game operation the Federal Reserve has in play in order to stimulate artificial demand for US Treasuries. Note that UK Treasury holdings have literally exploded from $106 billion in October, to more than double, or $231.7 billion in February. This is by and far not just hedge fund additions, and is certainly not merely any offshore operations that China may have in order to acquire USTs under the radar, as that would be a very naive way of avoiding the spotlight.
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Houston, we have a problem.
Actually it looks like America has run out of "enemies" to screw (I'll leave it up to the reader to determine how an enemy is defined) and has turned to its "friends".
Didn't you hear. There is no "special relationship" with Britain anymore.
I think they bought the UST in exchange for the return of their bust of Churchill and the NTSC-formatted DVDs
It's not hedge funds...there is some other game going on......maybe protection from European investors because of the instability of the EUR....maybe foreign branches of US banks....maybe the UK central bank for the Fed.
My hunch is that the meltup has to do with capital flight in advance of a Greek/Euro crisis.
A story elsewhere detailed recent surge in Greek purchases of high end property in London. If the Greeks are getting out of Greece I do not see why Ireland, Spain, Portugal should be putting money in.
The next issue is capital controls. And if you sense a possible Greek/Euro meltdown then you will want to get your stash to safety in advance of collapse or imposition of controls.
Market seems hell bent on going higher. Bad news/Good news, rationalizing worse than expected economic numbers, cherry picking obscure reports - doesn't matter. As I said yesterday, this baby will keep running until we challenge those all time highs. Amazing as it is.
I hate to say it....I moved my 401k back into general equities yesterday. Been in MM type funds since DJIA of ~14k+....
I agree with you. Until something major happens, this market seems to want to go higher and higher.
I just wish my gold/silver holdings were performing like they should be....but that is another story.
Be nimble and good luck.
Did the same exact thing at the same time (yesterday) for the same exact reason. My first option would have been to liquidate the whole damn thing take the tax hit and split what's left between FTNs and PMs - but alas so long as I'm a slave to my current employer that's not an option.
So, freedom being just another word for "I got nothing left to lose" I've put my meager "retirement" money back into the ponzi.
I doubt it will end well. My only hope is that I manage to change jobs sometime soon (ever?) and be able to execute "Plan A".
I'm 27, so I have a while to "make" any losses right again...
I was getting a return of 0.00%, so even a loss will be more exciting.
schoolsout
I appreciate the magic pull of the stampeding herd but you are succumbing to group think when you presume that you can "make" up any losses. The presumption assumes things will return to "normal" and that the capital markets are "functioning" simply because the herd is flocking towards to flickering lights and swift movement.
One of the problems of capitulation is that now that you're in, after such a long time staying out, your view will change to that of justifying staying in. Your bias has now changed, making you primed to take losses. Nor only is your mindset allowing for this (you have time to make up losses) but now that you're in at (or near) the top, you will have a tendency to seek information to confirm your changed position and you will stick around much longer, and take many more loses, than you would normally take because you got in so late.
I appreciate you insight, but I know the whole "recovery" is a farce and am ready to get back out very soon. I've got 3 in/outs left this quarter in my 401k now and only plan on using an out...be it a day or a month or 3 months from now....
My other holdings that are not retirement oriented are physical PMs and a few mining stocks. Planning to book profits in the stocks soon, too. I've got a feeling they will suffer with the rest (like the last cliff dive) at first. Just a hunch...got burned last go round with mining stocks.
And my comment about "making" up for losses was in jest, hence the "." around "make."
Didn't you pen something up the other day about thinking like the herd? Or did I misread that?
I talk about "herd mentality" all the time but most certainly not in favor of following the herd, though there are times when you can either play it for a while or be contrary. What do you mean?
I just thought you meant that sometimes it pays to think like them. (not saying you meant to do what I did, though) I may have missed the boat on my move, but I'm comfortable with it.
As I said, I'm ready to get out when necessary.
Yes, one must always understand what others are thinking. Which requires getting into that mentality in order to understand. But one can't immerse oneself into that thinking completely without totally surrendering to that mentality, which means one can't fully understand it while retaining an objective point of view.
Of course, it can be argued the other way around, that one doesn't understand the power of herd mentality if one wishes to remain on the margins as an observer. While we all die sometime, I prefer not to die at the bottom of a cliff with thousands of bodies piled up on top of me. At best, my lot in life may simply mean I'm one of those who is on top of the pile, dead as a door nail but one of the last to go.
I am by no way immersing myself in their mentality.
My daily reads are ZH, Jim Sinclair, Denninger, Jesse, and a few others.
But, you can't argue the amount of liquidity sloshing around and notice prices going up and never going down, even with shitty news.
What will it take to set the markets off? I wish I knew...All I know is things that would normally set it off haven't. And as long as the word "bailout" is around, I'm not sure what will.
Just my $.02
Dude,
I'm not pointing a finger at you. I'm speaking broadly about a subject, not specifically at schoolsout. You explained to me your caution and I have accepted that you are fully aware. The following sentences are not directed at you personally.
I agree that there is massive liquidity other there. My very real fear is simple. The circuit breakers have been pulled and caution has been thrown to the wind. What does the investor do when another 25% down day comes along. MF's get end of day pricing, regardless of when the sell button is pushed. Stop losses can be missed by opening gaps down.
To argue that the market will rebound as it did in 1987 is to ignore that economic conditions have deteriorated terribly since 1987. There is no fundamental strength left in the world's economies, just funny money being pushed down the pipeline, all supported by the illusion of normalcy and confidence born of the herd mentality. The herd can turn in an instant and I submit that the Fed has used its last bullets and has nothing left to instill confidence in the herd.
If the herd smells panic, the rush to the door will be breathtaking. And I submit it's a matter of when, not if.
sounds like we both agree
Not for nothing, but I (who just turned 44) would stay out if I were in your shoes.
Like I said, my "Plan A" is to change jobs (pity, I kinda like this one) and liquidate the 401k - never to return. I'm just playing now with some pretty tight stops in the belief that TPTB have legislated a green tape every day from now pretty much until Election Day.
EDIT: Ah, I see you already have the same plan. Never mind!
I commented on this when the latest auctions were complete, ie how did we know it was China who was buying? It turns out they really weren't.
This is very alarming as England is the epicenter of the inbred, money changer counterfeiting operation.
The end game is closer than anyone can imagine. Watch Gilts closely. In fact, sell Gilts now.
Brownstain dancing to America's tune again
Just more evidence of the Fed's "London connection".
And let's not underestimate the closeness of that connection. Tony Blair spent eight years as W's lap dog, cheerleading the war in Iraq, and positioning the UK as the most enthusiastic member of the "Coalition of the willing." Remember the Downing Street Memos? The "facts were being fixed around the policy," so that something illegal could be done without the knowledge of a meddling public.
The same game is being played here with financial policies. The Fed's role as the backstop of last resort is being applied internationally, and it's entirely possible that the funds used to double the UK's purchase of U.S. treasuries came from American wallets.
Harry you prove why markets crash cause you leave all rational at door and play the momo......what fools
Certainly this has to do with some obscure UK holiday and the associated double down on USTs annual tradition..I finally understand this market..whew
UK buyer is China, they have been doing this for years. Just wait for the several hundred billion dollar revisions, like they always came out.
I would normally agree, but not this time.
"This is by and far not just hedge fund additions, and is certainly not merely any offshore operations that China may have in order to acquire USTs under the radar, as that would be a very naive way of avoiding the spotlight."
thats quite normal.
The bank of England and FED are same entity, they are established and owned by Rotshild family, so its give and take shell game.
Inclined to agree with you there
I knew the Brits were lying when they said they have massive debt and huge deficits.
The BOE ran out of QE money at around Feb, This may be a reason friends are buying, The general election is in a few weeks, This too may be a reason, I dont understand these things, One thing regarding sterling, I expect the Labour government to be ousted on May 06, The Conservetives will issue an emergency budget within 50 days of winning, Like Greece I expect a fraud type blackhole to come out in this budget with severe austerity actions, Could this be possible? Yes, Will the £sterling tank too? Gilts are high risk for me at the moment.
UK = Fed
Most people, even those on ZH or other contrary web sites, don't fully understand or appreciate the power of the BOE nor the London markets. Which suits the BOE just fine.
Awesome! We can default on a bunch on of bonds we sold to our own selves!
As for the UK, they are actually improving the quality of their balance sheet by taking on our debt. Therein lies a sad tale....
Had William the Conqueror known what modern England would be like, he wouldn't have bothered.
A view from Europe:
There a few "dark holes" in the UK and an implicit
connection between Bernankenstein and Mervyn King's QE program,
consisting of buying gilts, so US treasuries come
into the category, at least legally speaking, both
have the resources of a "printing press"
The dark holes hinting to a connection are the
following:
1) American rating agencies have adopted the position
of not re-examining the sovereign rating of the
UK until the results of the elections, whereas
neither candidate has a programm to cut expenses
and thus reduce the deficit
2) There is no legal follow up on the GS's Titlos
issuance for Greece, which normally should have led to
an investigation by the FSA of the operations of
the European headquaters of GS
3) Then this a rumour that the UK cooked their debt books
with the help of guess ? GS, a story brought out
by the European think tank LEAP-GEAB, pretty
famous in European economics thinking circles
4 ) Last, but not least, 'Gordo' Brown personally called
President Zapatero the eve of a Ecofin meeting to ask
explcitly that the "hedge funds'file be removed
from the agenda of the meeting. Then Michel
Barnier, the European commissioner with authority
on the matter, receives a personal letter from Tim
Geithner asking him to guarantee the possibillity
of competition on the European market ( approximately 75 % of
European hedge funds are run out of London or
the British Isles ). Perplexing...