China Sold Second-Largest Amount Ever Of US Treasurys In December: And Guess Who Comes To The Rescue

Tyler Durden's picture


While we will have more to say about the disastrous December TIC data shortly, which was released early today, and which showed a dramatic plunge in foreign purchases of US securities in December - the month when the S&P soared to all time highs and when everyone was panicking about the 3% barrier in the 10 Year being breached and resulting in a selloff in Tsy paper - one thing stands out. The chart below shows holdings of Chinese Treasurys (pending revision of course, as the Treasury department is quite fond of ajdusting this data series with annual regularity): in a nutshell, Chinese Treasury holdings plunged by the most in two years, after China offloaded some $48 billion in paper, bringing its total to only $1268.9 billion, down from $1316.7 billion, and back to a level last seen in March 2013! 


This was the second largest dump by China in history with the sole exception of December 2011.


That this happened at a time when Chinese FX reserves soared to all time highs, and when China had gobs of spare cash lying around and not investing in US paper should be quite troubling to anyone who follows the nuanced game theory between the US and its largest external creditor, and the signals China sends to the world when it comes to its confidence in the US.

Yet what was truly surprising is that despite the plunge in Chinese holdings, and Japanese holdings which also dropped by $4 billion in December, is that total foreign holdings of US Treasurys increased in December, from $5716.9 billion to 5794.9 billion.

Why? Because of this country. Guess which one it is without looking at legend.


That's right: at a time when America's two largest foreign creditors, China and Japan, went on a buyers strike, the entity that came to the US rescue was Belgium, which as most know is simply another name for... Europe: the continent that has just a modest amount of its own excess debt to worry about. One wonders what favors were (and are) being exchanged behind the scenes in order to preserve the semblance that "all is well"?

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Tue, 02/18/2014 - 11:32 | 4448047 Jumbotron
Jumbotron's picture

Well....we did bail out Europe's banks during the whole TARP and MBS buyback  scheme.  This is just part of the complete financial ponzi circle jerk.

Move on.....nothing to see here.....and nothing to do about it.

Tue, 02/18/2014 - 11:36 | 4448069 CrashisOptimistic
CrashisOptimistic's picture

Exactly.  This obsession with monetary ebbs and flows, looking for evidence of the Big Smash, is wasted time.

MONEY is not going to cause the upheaval.  Money can be changed and created by decree.  It didn't exist in the garden of eden and it doesn't have to mean anything you don't decree it to mean.

Money is not going to be the source of devastation.  Oil is.

Tue, 02/18/2014 - 11:44 | 4448104 nuclearsquid
nuclearsquid's picture

Tylers, was this selling, or maturities that weren't rolled over?


Tue, 02/18/2014 - 12:17 | 4448259 NotApplicable
NotApplicable's picture

That's what I was wondering. I know they've been moving to the shorter end of curve over the past few years.

Tue, 02/18/2014 - 12:48 | 4448443 Doubleguns
Doubleguns's picture

The difference is very subtle. Not buying more not rolling over more. Effect is the same however. 

Tue, 02/18/2014 - 13:00 | 4448505 nuclearsquid
nuclearsquid's picture

I am not a fixed income guru, so I have not a clue. But suspecting a sublte nuance, I was hoping that a commenter may be said guru (and give us any buried tea leaves).


Tue, 02/18/2014 - 13:23 | 4448612 TruthInSunshine
TruthInSunshine's picture

I fear that there's more at play here, and that Belgium may be aggressively moving to corner America's chocolate reserves.

Tue, 02/18/2014 - 13:28 | 4448632 zaphod
zaphod's picture

As the EU countries trust each other less and less, the logical thing for them to do is to sell the bonds of other EU countries and buy US bonds.

Yes US bonds are going down, but if you were Belgium or France would you want to own Greece or Italian debt or US debt?

Tue, 02/18/2014 - 13:38 | 4448700 Doubleguns
Doubleguns's picture

What greater fool do they sell the EU bonds to. That is the problem. 

Tue, 02/18/2014 - 13:48 | 4448752 Son of Loki
Son of Loki's picture

Hu bought them?

Tue, 02/18/2014 - 14:11 | 4448846 SWRichmond
SWRichmond's picture

Sum Ting Wong

Tue, 02/18/2014 - 14:22 | 4448922 Dr. Richard Head
Dr. Richard Head's picture

Uh-ohhhhh......ZH made it to Drugge.  Cue the Republican party enamoured....

Tue, 02/18/2014 - 14:48 | 4449029 TruthInSunshine
TruthInSunshine's picture

Drudge has posted 3 exclusive ZH articles on its front page for 3 out of the last 3 days, now.

This one, the article on Soros' put positions, and another one I can't think of at the moment.

Tue, 02/18/2014 - 15:00 | 4449092 nuclearsquid
nuclearsquid's picture

Ha! so THAT's your contrarian indicator!

Tue, 02/18/2014 - 15:02 | 4449102 TruthInSunshine
TruthInSunshine's picture

No (it's not THAT much more complex, though).

Tue, 02/18/2014 - 15:20 | 4449162 MillionDollarBogus_
MillionDollarBogus_'s picture

There is a reason why you will see the same headline in Drudge and Zero Hedge...

The more sensational the story, the more likely the return vistor traffic goes up...

Sensation sells...

Could even be the same editors...

Tue, 02/18/2014 - 15:27 | 4449210 TruthInSunshine
TruthInSunshine's picture

Are you saying...

Tyler DurdenS = Matt DrudgeS ???


Tue, 02/18/2014 - 15:31 | 4449221 Jack Napier
Jack Napier's picture

US Treasuries bought by Belgium. Bank of Belgium receives money from ECB. ECB receives money from Fed via dollar swap lines. Fed creates more Treasuries.

Headlines read - Fed not monetizing their own debt!

Tue, 02/18/2014 - 15:40 | 4449254 TruthInSunshine
TruthInSunshine's picture


Everyone is raggin' on me for not dropping more clues as to what my unproven warning sign is (1st mentioned in Soros' put thread), so, only due to my weakness to popular pressure -

A simple algorithm indexing Dan Zanger + Barrons, bitchez.

And that's the only clue I'm dropping, though it should be all anyone who is remotely familiar with irrationally priced (very much so) markets that are near their culling needs to know - IMO, YMMV, ETC

Tue, 02/18/2014 - 18:17 | 4449979 Keyser
Keyser's picture

What do you call it when you print your own $$$ to buy your own bonds through a 3rd party?  

Tue, 02/18/2014 - 18:21 | 4449998 Arius
Arius's picture

F&$) you Chinamen!


Tue, 02/18/2014 - 18:24 | 4450008 TeamDepends
TeamDepends's picture

A circle-jerk?

Wed, 02/19/2014 - 00:13 | 4451407 HyBrasilian
HyBrasilian's picture

they've got the cluster fuck surrounded...

Wed, 02/19/2014 - 03:25 | 4451645 mt paul
mt paul's picture

plan B 

Wed, 02/19/2014 - 05:44 | 4451735 SilverSavant
SilverSavant's picture


Tue, 02/18/2014 - 19:56 | 4450341 SAT 800
SAT 800's picture

I would agree with you. you want to monitor the mass mind; not some kind of statistics. I'm short the S&P, too; again. neutral today. have to get up early, tho. to keep an eye on the damn thing; not sure it's worth it.

Wed, 02/19/2014 - 03:54 | 4451672 satoshi411
satoshi411's picture

QE is a complete success, and finished.

Taper continues until FED no longer buys US-DEBT.

USA now self-sufficient.

Taxpayers in the USA off the hook on USA debt. ...

US Treasury disbands IRS, ... Europe to cover USA debt,

The USA FSA to made good with EURO's as the good European people pity the US public.



Wed, 02/19/2014 - 03:47 | 4451661 satoshi411
satoshi411's picture

Same owners, ZH & Drudge are both MSM mainstream clearing for AIPAC to feed shit to MUSHROOMS.

ABC-MEDIA follow the money to goldman-sacks, ... follow the money to AIPAC.

Wed, 02/19/2014 - 03:49 | 4451665 satoshi411
satoshi411's picture

Drudge is right-wing zionist DEBKA.COM bullshit and so is ZH.

Must be some consolidation coming down the line, or perhaps its just the old maximize links which GOOGLE-ALGO values.

It's all in the ABC-MEDIA family, aka AIPAC oligarchy, keep it simple stupid.

Wed, 02/19/2014 - 00:56 | 4451490 CSA
CSA's picture

3 times in 3 days equals advertising.  Tyler paid him.  Been watching this for a while, when Zero gets some play time, it always happens in bunches.

Drudge = capitalism

Tyler gets a few more readers which drives up his advertising.  A smart man would look at the time of month or year and see if there is some correlation for when advertisers are buying or contracts are up.


Tue, 02/18/2014 - 17:55 | 4449881 Cacete de Ouro
Cacete de Ouro's picture

Do not think that the US and Europe are ever really at loggerheads in the central banking world. Maybe the simplistic politicians are, but not the central bankers at the BIS.

The central bankers meetings at the BIS, are, in the words of Nathan Sheets:

"“You are there with like-minded people, and there really is a sense of central bankers' brotherhood. At many other international meetings there is a sense of 'You Americans are doing this' and 'You Europeans are doing that'. At the BIS, the questions are what kind of challenges do we face. Those relationships make it easy to pick up the telephone and call counterparts. The governors know each other, they like each other and they know how each other think, thanks to these meetings."

Tue, 02/18/2014 - 18:05 | 4449921 Cacete de Ouro
Cacete de Ouro's picture

What I really mean by this is that Belgium is a front for the BIS in its purchase of US Treasuries. The old G10 states take turns in being the fall guy.

They draw straws for being fall guy. Seriously, they do it in a bar beside the Rhine. Whoever chickens out might have to swim the river.

Ok, seriously, they drew straws for European gold sales (to the Saudis) in the 1990s and 2000s. Belgium first, and Sweden, and Netherlands, then Suisse and then (the UK for bailing bullion bank reasons), after that France; in the meantime Germany did secretive swaps because they were chicken shits about sales for political reasons. Same with the spineless Italians, lots of gold gone there, but they won't admit it.

Tue, 02/18/2014 - 22:12 | 4450999 balolalo
balolalo's picture

this is the most expensive game of hot potato ever.

Tue, 02/18/2014 - 23:40 | 4451286 rbg81
rbg81's picture


Tue, 02/18/2014 - 23:38 | 4451287 rbg81
rbg81's picture

This will not come as a surprise to anyone who has been paying attention.  This is a global Ponzi scheme and therefore requires global cooperation to make it work.  Everyone is bankrupt, but as long as the sheeple believe all is well, the System will continue to function.  Which is why they will continue to push globalization and, eventually, a global currency.  With a global currency, there is no competition, no one to call the fiat bluff, and (best of all) everyone has no choice but to use it.  If things get sufficiently desperate, private ownership of precious metals being outlawed as well--impractical as that is.

Tue, 02/18/2014 - 15:43 | 4449277 Urban Redneck
Urban Redneck's picture

In their attempt to corner America's chocolate reserves, did the Belgians meet settlement terms with one of Janet's PDs with the old stash of exported BennyBucks or newer issue Greek/Italian bonds?

Tue, 02/18/2014 - 17:31 | 4449770 BoNeSxxx
BoNeSxxx's picture

UNBELIEVABLE.  The Central Banks have taken to kiting checks.  

Check kiting is illegal if the citizens do it... but, then again, so is printing money... 

Tue, 02/18/2014 - 18:48 | 4450088 Keyser
Keyser's picture

So now we know the end game. The Fed creates $$$ out of thin air and has a 3rd party buy US bonds, therefore keeping the game going when China pulls the plug and stops buying. As long as they can do this they can hedge any market, out spend any investor and stack the derivatives market any way they want. It is all smoke and mirrors. 

Tue, 02/18/2014 - 17:45 | 4449842 Dugald
Dugald's picture


Belgium has that kind of mony, really?  bet they paid with gold foil wrapped chocolate pretty string sacks.



Tue, 02/18/2014 - 18:24 | 4450007 Arius
Arius's picture

typical ungreatful reaction!


don't look a gift horse in the teeth ...

Tue, 02/18/2014 - 22:52 | 4451076 deflator
deflator's picture

There actually are cocoa reserves, believe it or not.  I picked up 12 ginormous bags(grossed out at 80,000lbs) of cocoa in Pennsylvania going to California in a hurry(48hrs). I was a team driver trainer with a new apprentice and was sweating being 4 hours late for delivery appointment because of snow storms across I-80 and my apprentice was afraid to drive in snow.(had to chain up over donner pass, mandatory dot check for chains) Got there and there was a warehouse full of those giant bags! I asked them why the rush to get these? He said dont worry about it and gave me a slab of chocolate an inch thick and about 2 feet by 2 feet square.

Wed, 02/19/2014 - 02:26 | 4451597 magne13
magne13's picture

No those are not reserves, those are goldmans warehouses that store the supply so they can manipulate the price, charge hersey a higher amount and drive futures prices higher, they won't release the supply till the price goes up.  same story different day.  release the address of the warehouse and find out who owns the warehouse, buy cocoa futures and wait till you are instructed to pick the cocoa back up, sell your futures. you are an insider you just don't know it.

Wed, 02/19/2014 - 01:45 | 4451550 Shazam342
Shazam342's picture

America has chocolate reserves???  How sweet! Maybe we can all have Hershey Bars as legal tender now!

Tue, 02/18/2014 - 19:46 | 4450286 screw face
screw face's picture


Tue, 02/18/2014 - 11:46 | 4448116 SAT 800
SAT 800's picture

You're completely wrong; as are most members of "cults"; but aside from that, you're doing pretty well.

Tue, 02/18/2014 - 11:51 | 4448137 fonzannoon
fonzannoon's picture

We don't want an echo chamber in here right? 

Foreign CB Treasury holdings went up by $78bil in that one month, and November's increase of $62bil was already huge...

key take-away

-Highest ever recorded foreign CB Treasury holdings at just under $5.8 total

Maybe the fed can taper after seeing that foreigners are foaming at the mouth to buy UST's.

Tue, 02/18/2014 - 12:04 | 4448201 kito
kito's picture

well fonz, that blows a hole in the well accepted theory on ZH about "nobody wanting our paper anymore",  that the reserve currency is on its way out. looks like the u.s. is more popular than ever. 

so taper schmaper. what a fool the fed has made of the doubters, the doomers, the naysayers. everybody who said it couldnt be done. too funny man. too funny because its so sad all i can do is laugh. 

i wonder if the fed looks at blogs like zh and think "such silly naive children, they just dont understand"

Tue, 02/18/2014 - 12:13 | 4448224 fonzannoon
fonzannoon's picture

"Bulls can only hope that Birinyi is correct (and it's the stock that matters)..."

so far, so good.

anyone who is junking feel free to jump in here. I look forward to it.

Tue, 02/18/2014 - 12:19 | 4448270 max2205
max2205's picture

And Yellen gave the money to Belgium to buy them...what a clusterfuck....the Fed is cornered but somehow its still got glue holding it together

Tue, 02/18/2014 - 12:24 | 4448295 optimator
optimator's picture

When you can wire money that doesn't even exist anything is possible.

Do NOT follow this link or you will be banned from the site!