Scary Chart Of The Day: Average Foreign Purchases Of US Securities Take Out Lehman Low

Tyler Durden's picture

As we reported earlier today, for whatever reason China sold the second biggest amount of US Treasurys in December. However, that was only part of the story. In fact, as we also noted, while the two largest US foreign creditors were net sellers, total foreign bond holdings actually rose in the last month of 2013 and as the chart below confirms, when it comes to Long-Term Treasury paper, foreigners were actually buyers of some $18 billion in Treasurys. It is everything else that they sold in the month when the S&P hit its all time high: specifically, foreigners were net sellers of Agency securities ($15.4 billion), Corporate Bonds ($7.5 billion) and Corporate Equities ($13.7 billion) something which hardly fits with the narrative of the record stock market high generating confidence in even more buying down the line.



In the chart above it is the black line - gross purchases of US long-term securities - that is the most troubling, as its trend is hardly anyone's friend.

So what happens when one smooths out the line to normalize for monthly fluctuations? This:


The chart is very disturbing: it shows that as the S&P rises higher and higher (on ever declining volumes), foreigners are buying fewer and fewer US securities. In fact, on a 12 Month Moving Average basis, foreigners bought less long-term US securities than they did when Lehman crashed! 

Luckily we live in a New Normal when price is no longer determined by simple supply and demand (and certainly not from retail investors who have long since given up on the fraudulent, broken US capital "markets") but Fed jawboning of a record $2.5 trillion in bank excess reserves, corporate buybacks and HFT algos spurring momentum ignition and buying because others are buying.

And so we have come full circle, because while, understandably, nobody had any appetite for US securities around the Lehman crash when until the Fed stepped in and singlehandedly took over the US capital markets it was unclear if there even would be a US capital markets, now that five years later the S&P has risen to a level nearly three times the March 2009 lows thanks entirely to the Fed's $4.1 trillion balance sheet backstop, the interest in US securities is... lower than it was in the days just after Lehman!

Source: TIC

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Ham-bone's picture

What makes more sense -

that the Fed ran (runs) a secondary QE program (perhaps equal to the on-books QE...perhaps double) through foreign financial centers of the world through countries like Ireland, Belgium, Norway, Taiwan, UK, HK, Russia, etc, etc. to maintain the US Treasury bid / yield and these purchases are "attributed" in the nation where they are purchased (not to purchaser)  Check out how TIC handles this...

ie, who believes that our good friend Russia increased their holdings from $8 B in Jan '07 to $140 B today???  Make sense???

ie, how bout China increasing from $400 B in '07 to $1.268 T now in US Treasury debt???

ie, how about Norway who held $0 in June '07 now holding $97 B in Treasury debt???  Make sense???

ie, Ireland held $10 B in ' holds $125 B???  Make sense???

And on and on...


These countries love american debt that yields nothing, will be paid back in inflated dollars, and ties them to a dollar based global system they are trying to move away from???  Since '08 they have all supposedly massively increased their holdings for somebody???

If above is even remotely correct - Dollar may be the dirtiest dirty shirt!!!

These nations are de-dollarizing asap via removing dollar trading (particularly China/ Russia), talking dollar down, but strangely their attributed holdings only go up...perhaps they really are moving away and we only see the facade of dollar stabiliteeeee'

The biggest "red flag" in this is the Fed tapering.  The Fed were buying all medium term Notes / all Bonds (up to their 70% limit) but on their stated exit from QE, "Foreigners" who own $5 T+ (double the Fed's holdings) would have seen rates would be rising and prices falling...if they were "investors" they would have been selling.  The Fed would have known they could never taper without a rate shock.  But no yields to the moon.  These "foreigners" are not "investors".  This is someone unconcerned with taking losses.


Winston Churchill's picture

"When it gets serious, you have to lie".

kaiserhoff's picture

It is scary, but where is the money going?

US stocks are godawful but the growth stocks in Europe, Asia, Latin America, are...?

Anyone, Bueler?

knukles's picture

The weather is all Bush's fault.
Jump you Fuckers.

nope-1004's picture

In other words Ham-Bone:  The Federal Reserve is one giant PONZI.


Keyser's picture

No worries, I have it on good authority that Uganda and Nigeria are going to be buying the bulk of US Treasuries moving forward. wink, wink, nudge, nudge, say no more..... 


Ham-bone's picture

@ nope - not sure they qualify as a Ponzi - maybe more correctly simply a counterfeiter..."Counterfeit products are often produced with the intent to take advantage of the superior value of the imitated product...Counterfeit products have a reputation for being lower quality."  Yeah, I prefer counterfieter @ this point since it doesn't seem they are inducing any significant new buyers to enter the game...

Doesn't really make sense that "market based" buyers of Treasuries would accept the same yield now as they did @ '08/'09 panic lows while equities have nearly gained 200%.  Now with QE taper, the full fraud is full frontal.  The Treasury market has been nationalized while we were busy watching 5 superbowls and assorted other televised gems.

SDShack's picture

Yep, it's a combination of counterfeit and ponzi. I am convinced TPTB plan is to control the bond market to neutralize the bond vigilantes. They can't have a repeat of the EU and have learned their lesson. The entire bond market is distorted with the Fed only controling 1/3 of it. Imagine what will happen when the Fed, controls 51%. Bond Vigilantes neutralized, ZIRP forever, no threat of debt service collapse - Game over. That's their plan. No wonder foreign security purchases are decreasing. Central Banks combined already defacto control the bond market. This China sells, Belgium buys article today proves it. The Fed, through their CB proxies around the world, already controls the bond market. It's all just a paper shuffle to keep the flow going. All ponzis are dependent on flow. But when the Fed controls the printing press AND the bond market, the ponzi is self perpetuating. This will only collapse by revolution from the people, and the people are sheeple. This isn't going anywhere for years.

nightshiftsucks's picture

As the economy takes a dump.This is going to be great, SP at 5000 and the country in a worse depression than the 30's.This will not go on forever.

Ham-bone's picture

I believe the Fed and "foreigners" are now synonomous...thus Fed and it's agents own 80% of Public Outstanding Treasury Notes / Bonds market.  Anyone looking for bonds to rise in US, Japan, Spain, Italy, etc. simply doesn't understand it's all been defacto nationalized.

I do believe there is real trouble here and now as the dollar has been clearly "managed" all day to avoid collapsing under 80 on DXY while PM's huge shortages are now becoming evident since ETF's / COMEX have been raided bout all they can be without collapsing the larger supply from uneconomical save one will doom the other...I think this is a momentous time and we are bout to have something shake the ground.

johngaltfla's picture

Well, Janet Yellen has decided to act by encouraging capital flight from the U.S.:


Yellen’s Fed Begins to Act: Foreign Banks in US Required to have Higher Capital Reserves

Tabarnaque's picture

I would agree with Ham-Bone that the numbers do not add up. In a different ZeroHedge article today we learned that Foreign ownership of US treasuries has reached an all time high in December ( In that month foreign nations were net buyers of Treasuries to the tune of $78 billons. This was in a month when the Federal Reserve was still buying $45 billons/month of US Treasuries. That makes for a combined total of $123 billons of US Treasuries.


However, I read somewhere that the US government ran a $50 billons budget surplus in December.  


So how can those figures make sense? Does it mean that US banks sold to foreigners and the Fed US Treasuries to the tune of $123 billons in December alone? I have a hard time believing that. December is the month when the Federal Reserve told the world that they were moving forward with their planed tapering.


So yeah right! Foreigners jumped in to massively buy US Treasuries from US banks when the buyer of last resort told the world that they were leaving the party??!! Sorry, I don’t buy that.


Then, just to put things in perspective, all this happened at the same time that EM were net sellers of US dollars as they tried to defend their falling currencies as hard as they could.  


It looks to me that it is getting increasingly difficult for the power that be to keep putting lipstick on the same old rotten pig. Their lies are now getting so out of proportions that no matter how much lipstick they apply, their rotten pig in increasingly visible.

Ham-bone's picture

I'm a nobody with no insider knowledge of anything...and I can see this thing is toppling.  What the "smart" guys must get paid not to see what is plain as day....but I guess my lack of connection to these markets allows me to be unbiased?   Or I'm some sort of dimwit who just doesn't understand anything and a contrarian fool for prides sake. 

I think the movement of the PM's is the harbinger that this chapter is done...last years draining of the ETF's / COMEX / LBMA was a one time solution for an ongoing lack of supply at these prices...we are about to transition to something different.

Tabarnaque's picture

Once again I agree with you. The move away from the USD as trade settlement and world reserve currency should accelerate. The BRICS Development Bank should be up and running within the next 12 months. With Washington trying as hard as they can to topple governments all over the world (Ukraine, Argentina, Venezuela, Syria, Iran, etc...) I would expect to see the move away from the USD to accelerate as a natural response to the growing agressiveness of the US government.

The Banksters without their fraudulent fiat currency are nothing. Except for their military power, which is the wild card that I expect them to play when they will be up against the wall. 2014 is likely to be recorded in history.

Seeking Aphids's picture

Agreed tabernac...mon hostie. Things are getting really interesting. Amazing how stable 10yr T bills have become...and the $US seems to magically float no matter what numbers the economy generates....(believable or not). I really think it is all about the US debt and maintaining low interest rates..the Fed will do whatever it takes to keep those rates down. Everything else is bs.

Thought Processor's picture

Well done SDS.  Well done.





Carpenter1's picture

This is solved easier with philosophy than math.


You start with a worthless item as your trading unit, therefore the entire market is worthless.  Therefore,  it does not matter how much is lost or gained. There can be no crash if the architects are willing to create unlimited units.


If this was all there was, yes, it could go on forever,  though not successfully. But it is not all there is. This is a closed system which is vulnerable to its antithesis,  hard assets with intrinsic value.


Ie; Gold and Silver. The same destroyers of every corrupt monetary system ever invented.  So long as the system is fraudulent,  it is vulnerable to gold and silver. Ultimately,  this is what will bring this house down, not a crash, which is a destruction of worthless monetary units. These can be created, gold and silver must be produced. 

Ham-bone's picture

finite trumps infinite when infinite units created infinitely are valued in finite shiny stuff

Lewshine's picture

What a complete waste of time. I don't care if foreign governments are buying US treasuries. Because first of all, the information isn't credible - Why? Because it's govt generated...And guess what? Govt. LIE!! ...And PRINT, and LIE  some more!! Why would we lend credibility to govt or the private Fed by asking the question - It legitamizes their daily BS!


Wake me when this market swoons 30% in one trading session - till then, BTD!

Ham-bone's picture

right you are...

"The data are collected primarily from U.S.-based custodians. Since U.S. securities held in overseas custody accounts may not be attributed to the actual owners, the data may not provide a precise accounting of individual country ownership of Treasury securities"

this data really is utterly

Long and short of this is we have no idea who bought these, who owns these, only where they are purchased and being held.  Nothing to stop the Fed or ESF or whatever to buy all the Treasury's they want with free money and hold them in China or Japan or Belgium to attribute them to "foreigners" rather than Fed???  If this is 10% right, be very very afraid of the dollar.

Thought Processor's picture

You said it Winston.


The TBTF Banks are clearly holding this whole pyramid scheme together with financial mechinations (ie: Lies).  Only question is when they pull the rug out from under everyone.   

I would imagine that the manipulations required in the FX world would alone be quite a responsiblity, especially if one were asked to keep them hush hush.  

Probably a little stressfull especially when the whole systems authenticity is at stake.

Must extend the pretend for now though.  Especially if you don't want to find yourself falling from a tall building.

And of course if you play their game you are in effect supporting it.


It's a strange game-  the only way to win is to not play.



Ham-bone's picture

Imagine if the Fed (or some like entity) really is the buyer of first, last, all resort what happens when the US goes to stick it to all those "foreigners" and default on their $5 T+ in Treasury debt...sorry, who gets screwed again???

We are to believe that all Foreigners want is sure losers of Notes / Bond Treasury's, Treasury's, and more Treasury's...but no stocks...hmmmm.

kaiserhoff's picture

I believe a lot of it went through foreign banks, some of that at light speed.  And that sounds so much more DIVERSE than if everything is held by the Squid, the Morgue, or AIG.

Someday soon, the Fed's cash flow will go negative, and Mr. Yellen will need a new nappy.

MuppyPuppy's picture

I assume that you're saying that the Fed is not only buying our own Treasury's "on the books" but also funding foreign countries to hold the Treasuries on their books, making our exposure so much greater.  I've read that this will result in a world wide stagnation with low growth and low job opportunities for decades.  This is the best case scenario but I don't think any of the rules of economics are valid anymore.  It's all about politics and when the economies of the world are taken over by governments, it's all a charade.  It seems that they could potentially keep this going for decades to come without the crash that should happen under any economic rules.  The biggest risk might be that governments will move on to taking the cash assets of the poor citizens and we will all be wholly dependent on respective governments to survive.  Slaves of the State?

FightingtheFed's picture

Ham: I read over your posts and what you say makes sense but how does this help the Fed? If they are private and are in for the profit where’s their profit coming from?

How does it benefit the Fed to grow their balance sheet by greater than 4 trillion?

Seems to me that the Fed is nothing but a diversion in order to allow the Banks and Hedge fund managers to molest the Middle Class.

Ham-bone's picture

all ultimate Fed losses or shortfalls are made up by the Treasury...Fed gets bailed out to "save us" from something "far worse"???  I believe this was actually written into law in '09 or '10....

Commodities are generally breaking up (oil, nat gas, PM's, softs, cattle, hogs, coffee, all moving up smartly as are equities...assets all seem to smell the trouble coming and are getting bid regardless fundamentals...looks kinda like early typical stages of hyperinflationary activity - dollar weakening on tapering and dancing on the breakdown line


Eahudimac's picture

Shawdow banking and off the books schemes you never hear about. I've come to the conclusion that this is all theater to keep the 99.99% occupied while the 0.01 consolidate power and real wealth. There is a war for gold going on and that we only occasioanlly hear about. China is apparently winning, but whose to say that the few who call the shots in the western world are not also stashing away their piece of the prize. They don't give a damn what happens to the financial system. They have their gold. The fed is tasked with keeping the illusion going as long as possible or at least until full militarization of the police is complete. 

Let's face it; aside from divine intervention, there is only one way out of this and it doesn't involve protesting with a sign on a stick.

magne13's picture

Well we all know how well bonds performed in that time period after, this time will not be any different, 10yr to 1.75%

johngaltfla's picture

BULLISH. It means the Fed will print more, buy more, and then stick it to the taxpayer up the rear. BOHICA America, this trip is going to be far, far, uglier than 2008. When that 23-26% crash occurs in equities in the near future, the Fed will vacuum up every steaming pile off their banks' books and demand the taxpayer buy them back at par+1.

VD's picture

no worries Yellen has infinite fiat to prop this thing...even if the world burns and no one's buying the S&P will rise...

Keyser's picture

Yeah, but it will mean nada when people wake up and realize it's nothing but monopoly money. 

Debtonation's picture

Well in their defense, its hard to buy when the Fed is buying with an infinite supply of money.

NaiLib's picture

USA is heading straight into a Japanese Scenario. It does not help with helicopter cash. Deflation will hit anyway. Japanese tried it in the beginniong of deflation. And the "people2 just saved it. Same will happen globally. DEMAND will disappear. All that is left is printing and buy backs. Until Corp balance sheets are so streched it wont work anymore.

johngaltfla's picture

The only smilarity to Japan is that we are running a Kamikaze financial system. Sadly our non-homogenous society will go totally Yugoslavia and Stasi police state (beyond what it has now) and implode.

BandGap's picture

This is NOT the same as the Japanese deflationary debacle. Japan is under the umbrella, the US is the shelter. The shelter cannot act in the same way as those it shelters.

Look out below.

kito's picture

 deflation has been here. all of this printing is making up for massive amount of hidden asset losses in digital dollars, its like eating and eating to compensate for the loss of nutrients from a malabsorptive disorder. all of the eating in the world wont put on the weight and it wont make you plump and rosy...

deflator's picture

 If they helicopter cash to the citizens of the U.S. there is no way that it will be "saved." Fed knows helicoptering cash to citizens is lights out inflation/everybody trading dollars for whatever as quickly as possible. Their strategy is extend and pretend and let collapse be on an as gradual as possible individual level. ie, "muddle through" while telling everyone the recovery is progressing just fine. Or whatever the fuck that bitch Yellin said to that effect.

OldPuck1980's picture

Who buys the 'broken promises"? The deflation trade will catch everyone, then the fun begins! We have not seen a real 'one run' as result of all this Keynes's stuff, since the late 20's,30's!  80 billion for an Olmpic Event in Russia, truth? Value will be found as collateral calls are met in the derivative markets, we will truly find out who is to big to turn 'pale' in a few months/years!! As some have said before "In the long run, we are all dead!" Most are dead or were too young to remember the Dust Bowl (think central California 2014), food on back porches, or soup lines. Do you know your neighbors or local bankers any more? Teleology may rear its face again for all!!!Trust will become a true local virtue!!


Spungo's picture

What happens if the fed buys ALL of the US debt? Wouldn't it then be possible to default on it with no consequence? We would just get stuck with the inflation, but we're stuck with that anyway.

Winston Churchill's picture

That only happens when the petro dollar dies.
Then its hyperinflation,not inflation.

toros's picture

"It is scary, but where is the money going?"

Pick any stock - I stopped counting at $100M


Atomizer's picture



Hickere, Dickere Dock,

A Mouse ran up the Clock,

The Clock Struck One,

The Mouse fell down,

And Hickere Dickere Dock.

Winston Churchill's picture

Rind a ring of roses,
a pocketful of posies....

Atomizer's picture


Ashes, Ashes, we all fall down.


AdvancingTime's picture

Years ago before the "Bernanke has all the answers" era, many of us criticized Japan for failing to own its problems. Many people thought Japan should face up to the mess it had created and do the right thing. Broadly accepted was the concept that only by letting its zombie banks and industries fail could Japan clean out the system and move forward. Instead the Government of Japan ran huge deficits and ran up massive debt.

While they claim otherwise, in many ways Bernanke and the Fed have put America on a path that mirrors the same unsuccessful path taken by Japan. A path that avoids real reform and bails out the very people that caused many of our problems. Bernanke upped the ante by setting the bailout and money printing machines on high and flooding America and the world with QE. More on the question of whether Americais now on the path to lost decades in the article below.

Al Huxley's picture

I have to say, the FED and their MSM mouthpieces have done such a good job of managing the data and cooking up stories to explain why all is well that even I'm starting to believe them.  I guess you can run deficits in perpetuity and monetize with impunity and there are no negative consequences whatsoever.  Who woulda thought?

Atomizer's picture

Purchase the Rosetta Stone Double Speak language edition. You'll advance your communication skills/interpretation.

MeelionDollerBogus's picture

Valuations are a fraud, volume is a fraud set only by HFT's trading to each other, prices are propped up by printing & even the Morgue's Banksters are now jumping off buildings.
Bullish - ALL IN!!!!

adr's picture

The collapse of California agriculture may be the event that sets the collapse in motion. This fucking bullshit stock market has been pumped to give the 10% enough dollars to absorb the hyperinflation coming to food prices. Enough cash to live in Dubai and snack on food the masses can't hope to afford and can't grow themselves because of government intervention. One fucking tomato might be $10 by next fall. Some Wall Street fuck will probably buy every strawberry patch in Ohio to corner the market so his $200 a plate restaurant can serve berries and creme for $100 to the likes of Blankfein amd Dimon. The massive multinational corporations control the farms and control the transportation of everything. The US is a net exporter of gasoline, but we're paying $3.50 in February. This has been designed to prevent the common people from being able to support themselves.

 Like the Ukraine people will see farms filled with food not meant for thier consumption. Trespassing will be met with a bullet to the head. Growing your own food will earn you a trip to a FEMA prison camp.

We're fucked. 2014 has already seen massive inflation in food prices. McDonald's garbage increases weekly. Big Mac meals are already over $6.30 most places up from $5.80 at the end of January. Wages can't keep up with 20% food inflation per month. Soon we will hit critical mass where the food will sit and spoil because people won't be able to afford it. Ranchers won't raise cattle because there won't be any demand. We'll have our government rationed Soylent Green.