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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New American Revolution's picture

The bought the U.S. Bonds with money the FED gave them to buy them.   Taper?  Hardly.  In name only.

Chuck Knoblauch's picture

A royal flush of worthless US dollars does not impress me anymore.

steveo77's picture

We had an Asteroid whiz by Monday and on Sunday I predicted a big earthquake, and we got a 6.5 in the caribbean.

After some cross country skiing with the dogs (ski-journing) I will have to work on that grand unification theory that ties in gravitation, electric, magnetic….and the missing factor…

Post here
http://nukeprofessional.blogspot.com/2014/02/asteroid-fly-by-today-february-17th-and.html

kchrisc's picture

The new board game of "Hot Potato" called "Bond Potato." The one holding the most UST bonds and less gold when the "dollar clock" stops loses. A twist in the game is that players must also scramble to get "physical" gold, as not all that glitters is gold but tungsten.

Chuck Knoblauch's picture

don't worry, be happy - a brave new world is on its way!

Bastiat's picture

USDX losing fingernails hanging onto 80.00.

Oldwood's picture

When the shit storm finally does hit, it will be the most predicted yet least understood disaster in history. While we may know the root causes, they have managed to create such a convoluted and complex fucked up mess trying to keep this thing afloat, there will be special schools built simply to study it. Sadly it is all deliberately complex simply for the same reason as the income tax code is so, so no one will be able to figure it out, so chaos will prevent the eye from seeing with any clarity what we face. No one will have been able to see this coming, even as it consumes us.

Groin's picture

All good except for the school to study it, that requires a suplus to pay the academics and that won't be available.

SharkBit's picture

Holy Shit Batman! All is Well.

Rising Sun's picture

USD goes down, Euro goes up. 

 

How many insolvent countries in Europe currently?

Chuck Knoblauch's picture

EUROPE NEEDS MORE INFLATION!

 

THANKS FOR NOTHIN.

Save_America1st's picture

And they promptly converted it into further stockpils of phyzz gold...probabaly phyzz silver too, who knows? 

Has anyone been able to keep track of any large purchases/shipments worldwide of phyzz silver like they've been able to track with phyzz gold?

I think if we ever get good reports on where the phyzz silver has been going it's going to create the mother of all silver runs.  People just don't have a clue of the phyzz fundos for real silver.

Has anyone seen this 3X Bull silver ETF yet?  USLV

Whoa baby, is that one going to go crazy when the silver rocket leaves the launch pad!!! 

 

Chuck Knoblauch's picture

You make it sound like gold and silver grows on special trees that grow in Belgium.

silverserfer's picture

don't do it its a trap SA1. If you want to gamble go bet 5k on black and be done.

The $ you put into  ETF's is used to bet aginst you. Ur shooting yourself in the foot by buying into the deriviatives.

Apeman's picture

Belgians = useful idiots

EastCoast90's picture

Tell them to send their finest Belgian waffles and hold the syrup.

Chuck Knoblauch's picture

Operation Masterbation is in full swing! Excellent job Janet "non-gentile" Yellen!

RobinHood73's picture

This has got to be the most bearish news I have heard thus far.The Ponzi is dying right here,right now....

BadDog's picture

MyRA = war bonds

Lionhearted's picture

Any idea what they bought with their sale of FIAT JUNK paper? Gold and Silver maybe? Or where they geinuses like bonestar and invested it in 2bitcoins?

Randoom Thought's picture

So what is the problem? They will use the debt as collateral to issue more of its own debt. Life is good.

kenezen's picture

It's a treasury play. The question is only what offset is sitting in the treasuries portfolio. Out of the money CDS swaps on Euros?  Perhaps TruPS?

The fact is they can't continue offestts if Japan and China starts selling serious amounts. Perhaps that's why Bermuda is seeing BIG renewed interest from the hedge Funds?

I Write Code's picture

They needed the cash to buy bitcoins.

bankonzhongguo's picture

In terms of pure politics, it would be delightful if China would simply lower its dollar holdings by the same amount as the monthly Fed QE operations - say $55 billion/month.

That would send an big message, but also call a spade a spade.

At some point all those CPS big brains will have to rally around some kind of nationalist agenda which points a sharp stick at GS and JPM and their ruin of international financial stability.

Now, to be fair, China, Inc can and does kick the can down the road in building its sky scrapers, bullet trains and ghost cities, but they are a single party system.  They can keep those loans on the books just like their Japanese progeny.

Better for China to convert UST into physical gold housed in Beijing.

Fix-ItSilly's picture

It doesn't send much of a message if the lower Treasury holding of the Chinese is only because of a swap into euro denominated sovereign bonds.

If it was to hold oil, precious metals or to buy AAPL...  that would be a true reserve exchange out of Western fiat.

Pareto's picture

side bar:

 

anybody notice how the $TRIN is sporting a 1.53 (which by any historical non interfering measure) should be indicating a bear ugly day - a screaming sell - ass kicking - behind the woodshed beating.  Especially coupled with the $VIX.  These indicators use to mean something.  They sure don't anymore.  Shinannigans!!  And everytime I see this, it seems to me that it can only mean the FED is increasingly adding to its position to the stock market - just as it has to the Bond market - that the FED is going to mop up bonds to keep yields suppressed, and mop up stocks to keep prices from tumbling.

 

Just another POMO day I suppose.

Bunga Bunga's picture

Don't worry, it is just the Chinese government members and oligarchs parking their money in Belgium.

yogibear's picture

Central banks of the world will play debt ping-pong.

I buy your debt, if you'll buy mine.

One huge debt circle-jerk. 

yogibear's picture

Central banks of the world will play debt ping-pong.

I buy your debt, if you'll buy mine.

One huge debt circle-jerk. 

supermaxedout's picture

And the final teams of this ping-pong championship are:  The Fed and the BOE.  The pound is still a well trusted money, look how many foreiign buyers of UK Guilts. Isn't it ?  And Dollar too, look how many US treasuries are still sold abroad, many, many to the UK. 

But now its seems, that there is a limit reached endangering the BOE.  But no problem, Nato in Brussels as the boss of EU Commissions President Barosso made it possible. Somehow, the tiny Nationale Bank van België is now capable and willing  to purchase huge amounts of suddenly offered US treasuries. The sellers did not want or need these treasuries in their portfolios anymore.  The Chinese do still have a Trillion, isn't it ?  The money the tiny Nationale Bank van België needed for the purchase was just, just  freshly printed from the new Fed print master lady and found somehow miracously its way to Brussels. Huh, that means trouble. When the US needs alredy such cheap and obvious tricks, then the end is maybe not anymore far.

Haager's picture

What a hell of an effort to keep money printing  hidden before the eyes of the dumb and stupid peasants. Makes me just ask: Why? Most of them wouldn't care if it would happen before their noses.

Fix-ItSilly's picture

So China flips USD$ Treasurys for Euro bond debt.  Big deal.

How else will the Western countries allow China to diversify their reserve holdings?  The Fed and ECB don't want Yuan.  The US and Euro Govts don't want their companies and resources to be purchased.  So China flips some Treasurys to the ECB.  Again... big deal.

A82EBA's picture

Belgium..Another correct forecast from Jim Willie's Hat Trick Letter (last month)

Mr Giggles's picture

This is just parce the parcel with many layers, this will not end untill

a merchant has the balls and says thats it no more free energy and

the prize is revealed to be a stinky dog turd (long gloves very long gloves.)

resurger's picture

Dump that shit!

GrinandBearit's picture

Just a house of cards waiting to collapse.

When a strong wind comes along... down it goes.

 

Took Red Pill's picture

Wait! Didn't the Fed give money to EU banks? All smoke & mirrors!

yogibear's picture

Nonsense with the Fed's balance sheet. How much drops off into off balance sheet.

The Fed is just like their member banks, fantasy accounting.

How much gold does the Federal Reserve have?

Chuck Knoblauch's picture

The economy is built on faith in magic.

Tenshin Headache's picture

Fantasy accounting, and they never get audited. Sweet.

Chuck Knoblauch's picture

China doesn't like the USD$ anymore. What ramifications does this have for the currency if Belgium doesn't continue acquiring US Treasuries, and China keeps selling? This article suck because it doesn't tell you who bought and sold the debt. We have to assume that it was some kind of swap? Bullshit!

optimator's picture

Who bought them?  The EU, with money wired from the Fed.  

bluskyes's picture

But, how much did they have to pay?

earleflorida's picture
That's about 3% less business china has in store for ussa in 2014... redemption, could now become a not so distant, 'death by a thousand cuts'!?!
Motorhead's picture

This is another story getting old, usually put out by the Jim Sinclairs, et al, of the world.  No mention of the hefty rise in 2012-2013.

rsnoble's picture

Hot Potato.  Or in this case hot garbage.