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Foreigners Sell A Record Amount Of Treasurys Held By The Fed In Past Week

Tyler Durden's picture


A month ago we reported that according to much delayed TIC data, China had just dumped the second-largest amount of US Treasurys in history. The problem, of course, with this data is that it is stale and very backward looking. For a much better, and up to date, indicator of what foreigners are doing with US Treasurys in near real time, the bond watchers keep track of a less known data series, called "Treasury Securities Held in Custody for Foreign Official and International Accounts" which as the name implies shows what foreigners are doing with their Treasury securities held in custody by the Fed on a weekly basis. So here it goes: in the just reported latest data, for the week ended March 12, Treasurys held in custody by the Fed dropped to $2.855 trillion: a drop of $104.5 billion. This was the biggest drop of Treasurys held by the Fed on record, i.e., foreigners were really busy selling.

This brings the total Treasury holdings in custody at the Fed to levels not seen since December 2012, a period during which the Fed alone has monetized well over $1 trillion in US paper.

So is this the proverbial beginning of foreign dumping of US paper? Could Russia simply have designated a different custodian of its holdings? No, because as of most recently it owned $139 billion in US paper, or well above the number "sold" and a custodial reallocation would mean all holdings are moved, not just a portion. For another view, here is what the bond experts at Stone McCarthy had to say:

We don't have a ready explanation for the plunge in custody account holdings. One thing that is striking about the drop is that the last several days was not a period of heavy market buzz about "central bank selling" of Treasuries, at least to the best of our knowledge. China and Japan are by far the largest holders of Treasuries, with holdings of $1.269 trillion and $1.183 trillion in holdings at the end of December, respectively. China's holdings are more skewed to central bank holdings. Selling of Treasuries would appear to be at odds with China's recent effort to depreciate its currency, although on March 5 and 6 there was a brief correction in that trend.

As for the timing:

... the Wednesday-to-Wednesday decline was much larger than the weekly average decline in Treasury holdings of $46.6 billion. That implies that the plunge in Treasuries occurred later in week rather than earlier.

Some further thoughts from SocGen:

Weekly data from the Fed for US Treasury securities held in custody on behalf of foreign institutions and central banks fell sharply over the past week and may offer a plausible explanation as to why the USD has been offered pretty much all week against its major counterparts. EUR/USD in particular has stayed strongly bid since last week’s council meeting (to the bemusement of the ECB) and touched a high of 1.3967 yesterday before easing back after the exchange rate comments from president Draghi. The reduced appetite for USTs and strong demand for EUR debt and equity securities underlines the difficulties the ECB is encountering to stop the strong EUR from reducing inflation expectations in the euro area.


Foreign holdings of US government securities held at the Fed dropped by a whopping $104.5bn in the week to Wednesday 12 March according to the data published overnight (see chart below). This marks the biggest single weekly fall on record and compares with just a $13.5bn drop the previous week and a 4-week average fall of $1.5bn. The previous largest fall came in mid-2013 (26 June, a week after the FOMC meeting) when holdings fell by $32.4bn. The selling over the last week coincides with the latest US employment statistics, a run of weak data from China and the escalation of the situation in Crimea and Ukraine.


Russia has threatened to respond with sanctions of its own should economic measures be imposed by the EU and the US after the referendum in Crimea this weekend. Russia currently holds $138.6bn of USTs (based on December data) and the country has been a net seller for a combined $11.3bn of USTs over the last two months for when data is available. China sold $47.8bn alone in December. The latest Treasury International Capital (TIC) data for January are only due next week so we won’t find out officially until May how much Russia’s US government debt holdings dropped in March.

So either China selling TSYs and buying EURs to make European import power stronger, if not so much its exports (much to Draghi's ongoing horror). Or Russia, which may be dumping USTs to support the ruble... Or dumping just because.


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Fri, 03/14/2014 - 09:52 | 4547551 agent default
agent default's picture

Oooooops.  So mush for safe haven.

Fri, 03/14/2014 - 09:55 | 4547567 Max Hunter
Max Hunter's picture

warm up the presses

Fri, 03/14/2014 - 10:00 | 4547613 NotApplicable
NotApplicable's picture

MOAR high quality collateral, amirite?

Fri, 03/14/2014 - 10:01 | 4547619 Divided States ...
Divided States of America's picture

Its just a subtle way from China and Russia to say FU to the US.

Fri, 03/14/2014 - 10:03 | 4547635 SMG
SMG's picture

I raise my flags, don my clothes
It's a revolution, I suppose
We're painted red to fit right in
I'm breaking in, shaping up, then checking out on the prison bus
This is it, the apocalypse
I'm waking up, I feel it in my bones
Enough to make my systems blow
Welcome to the new age, to the new age

Fri, 03/14/2014 - 10:09 | 4547676 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

I am practicing on my computer now, Ctrl-P, Ctrl-P.............

Fri, 03/14/2014 - 10:13 | 4547690 Manthong
Manthong's picture

The west is like a moth to the flame..

a bug to the zapper.

..but it is all to distract from the massive failure in process.

Fri, 03/14/2014 - 10:13 | 4547695 YBNguy
YBNguy's picture

Don't worry, the FEDs will blame it on cold weather

Fri, 03/14/2014 - 10:15 | 4547703 New England Patriot
New England Patriot's picture

Hold on to your butts.

Fri, 03/14/2014 - 10:19 | 4547733 matt1970
Fri, 03/14/2014 - 10:28 | 4547793 HoofHearted
HoofHearted's picture

All of you are making this implicit assumption that Ol' Yellen won't allow debt destruction to cause deflation. Yeah, I'm laughing as I type it too. 

We'll all be broke trillionaires soon. Luckily I've got my farm to keep me eating, and the protection to make sure none of you bitchez come try to eat my peas. 

Fri, 03/14/2014 - 10:55 | 4547906 Osmium
Osmium's picture

I don't like peas.  What else ya got?

Fri, 03/14/2014 - 11:28 | 4548081 fonestar
fonestar's picture

The Fed is the junkie of last resort.

Fri, 03/14/2014 - 12:43 | 4548462 zaphod
zaphod's picture

Who cares? The FED can just buy it all. Seriously what's the issue with free money, I mean it's FREE!!

Fri, 03/14/2014 - 13:32 | 4548678 James_Cole
James_Cole's picture


Fri, 03/14/2014 - 16:19 | 4549513 Occident Mortal
Occident Mortal's picture

Quick... somebody call Belgium.

Fri, 03/14/2014 - 16:27 | 4549538 Jack Napier
Jack Napier's picture

Sure, the Fed can make up the difference, but then they'd have to concede that the taper is off, that there is no cure for QE except more QE, and the emperor's proverbial clothes would be removed for all to see.

Of course we all know that, but success in class warfare requires giving people a lie they can believe in, no matter how irrational. Without the lie the jig is up.

Plus there is the hyperinflation genie to contain. Default may be the bigger spectre, but deflation is a joke.

Fri, 03/21/2014 - 22:50 | 4579436 MedTechEntrepreneur
MedTechEntrepreneur's picture

Paging Kyle Bass...Paging Kyle Bass...Entropy update please?

Fri, 03/14/2014 - 16:07 | 4549456 Cygnus Nigri
Cygnus Nigri's picture

long... pork!


Fri, 03/14/2014 - 10:32 | 4547807 Ulterior
Ulterior's picture

nice try, janitor boy

Fri, 03/14/2014 - 11:15 | 4548008 McMolotov
McMolotov's picture


Fri, 03/14/2014 - 12:20 | 4548343 fonzannoon
fonzannoon's picture

I wonder when ZH is going to retract this articles heading because this was not a sale of treasuries that took place.

Fri, 03/14/2014 - 13:31 | 4548675 Panafrican Funk...
Panafrican Funktron Robot's picture

I agree that the title is slightly misleading; the drop in this metric is merely strongly suggestive of a large sale.  There would be no functional reason for a drop in this metric apart from sale of the treasury securities.

In other words, if it wasn't a sale, what the hell was it then?  I know it's not a mark to market revaluation of the held securities, and there would be no reason to change the custodian given the product we're talking about.

Fri, 03/14/2014 - 16:08 | 4549458 fonzannoon
fonzannoon's picture

"However, Marc Chandler, chief Treasury strategist at Brown Brothers Harriman, said everything points to Russia, starting with the timing of Sunday's Crimean referendum and the potential for Western sanctions. He said rather than selling the Treasurys, Russia simply transferred them out of the U.S.

"Everything (Russian President Vladimir) Putin is doing is being extra cautious about retaliation, like bringing troops right to the Ukraine border," said Chandler. "The other reason I say it's most likely Russia is you look at the countries that have the largest reserves. It doesn't feel like it's China because China has enough on its plate."

Chandler said about half of Russia's foreign currency reserves are held in dollar-denominated instruments, and this would be about 80 percent of those dollar holdings.

"It could be somebody else, but it does seem circumstantial just on the timing alone," said Chandler.

He also said there are precedents for this type of behavior by Russia.

He pointed to the birth of the Eurodollar market—dollars outside the U.S. In 1956, when the Soviet Union invaded Hungary, it feared the U.S. would retaliate with financial muscle, and Russia-based Narodny Bank shifted dollars from the U.S. and deposited them in its London branch, he noted."

Fri, 03/14/2014 - 16:31 | 4549561 Jack Napier
Jack Napier's picture

Is it such a stretch that China did the selling to scratch Russia's back?

Fri, 03/14/2014 - 16:45 | 4549633 kito
kito's picture

its a stretch to think anybody is unloading massive amounts of treasuries right now. i think it was harbanger who has been relentlessly proving that there is no issue with u.s. paper. its all being absorbed and welcome with open arms for now. certainly that could change in an instant. but its a total non story for now. fonz is absolutely right. tylers headline is misleading

Fri, 03/14/2014 - 10:56 | 4547913 just-my-opinion
just-my-opinion's picture

Must be WAR....or is it human nature

Fri, 03/14/2014 - 11:59 | 4548236 Mr. Magoo
Mr. Magoo's picture


Fri, 03/14/2014 - 10:34 | 4547816 DisArray
DisArray's picture

It's always cold somewhere in the world.

Fri, 03/14/2014 - 10:14 | 4547697 kaiserhoff
kaiserhoff's picture

China is trying desperately to cover it's markers, when every truckload of copper has been sold four times and borrowed against five.  It's show time.

Fri, 03/14/2014 - 11:23 | 4548059 pods
pods's picture

I would say that is the most plausible scenrio.

It is not like other nations aren't running Fiat ponzi's and printing. One big one goes down, they all do.

Can kicking is getting more and more expensive.


Fri, 03/14/2014 - 10:10 | 4547681 Tabarnaque
Tabarnaque's picture

If foreigners are selling, then someone has to be buying, no? So the question is: Where are these toxic treasuries ending? In US banks of the Fed is expanding QE instead of tapering? 

Fri, 03/14/2014 - 10:19 | 4547731 Divided States ...
Divided States of America's picture

Much like whats going on with the MH370 plane debacle, NOBODY (or NO country) is telling the truth NOR willing to work with one another because they cant TRUST each other.

The blocks are in motion for some major SHTF event coming up momentarily.

Fri, 03/14/2014 - 10:41 | 4547859 Ifigenia
Ifigenia's picture

subprime junkies again?

Fri, 03/14/2014 - 10:58 | 4547926 just-my-opinion
just-my-opinion's picture do you loose an airplane....I mean a big one

If you play poker....It's time to play your hand

Fri, 03/14/2014 - 11:09 | 4547980 New England Patriot
New England Patriot's picture

It's sitting in a hangar somewhere being repainted with Lufthansa and having the middle third of the passenger rows removed.

Fri, 03/14/2014 - 12:26 | 4548384 Transformer
Transformer's picture

And whatever has happened to it, Boeing has known all along.  All 777's are monitored in real time, all parameters, via their satellite system. 

After 6 days, Boeing happens to mention that they were getting reports from the plane for 4 more hours?


Fri, 03/14/2014 - 11:47 | 4548179 Wahooo
Wahooo's picture

Were there even passengers on it?

Fri, 03/14/2014 - 22:07 | 4550752 MeelionDollerBogus
MeelionDollerBogus's picture

Could be an easy variation on losing a boat.

All aboard Zerohedge Asian Airlines.

Fri, 03/14/2014 - 10:37 | 4547840 real
real's picture

retirement funds ?

Fri, 03/14/2014 - 11:10 | 4547982 Rafferty
Rafferty's picture

CTRL  P baby.

Fri, 03/14/2014 - 11:49 | 4548002 CrashisOptimistic
CrashisOptimistic's picture

"If foreigners are selling, then someone has to be buying, no? So the question is: Where are these toxic treasuries ending?"

Bingo.  Almost.

They are ending up in the pockets of people who urgently want them and have been willing to pay up the price to get them, because that's what anyone rational does in deflation -- you buy bonds and you pay more for them and that drives the yield down.


Fri, 03/14/2014 - 14:08 | 4548845 Babaloo
Babaloo's picture

We would know if the Fed were expanding QE because we see the amount of bonds they're buying every day.  They have stayed on their previously announced schedule. 

The selling by foreign parties has been met by what looks to be domestic sources, and in fact the bond market has rallied substantially into the above mentioned selling.

IOW, the sellers have been wrong, assuming they could time their selling rather than the selling being forced.


Fri, 03/14/2014 - 10:18 | 4547723 TahoeBilly2012
TahoeBilly2012's picture

Listen up Zero Hedge spuds. The Fed will soon own ALL US mortgages!!! Stop and understand what that means. People need to understand this is NOT a failure but a Satanic plan. Get your head around it time is short.

Fri, 03/14/2014 - 10:29 | 4547795 GubbermintWorker
GubbermintWorker's picture

But the gov't will be willing to rent those homes to us serfs.

Fri, 03/14/2014 - 11:08 | 4547970 Bindar Dundat
Bindar Dundat's picture

I can't believe this was written in 2011.

Fri, 03/14/2014 - 16:34 | 4549574 Billy Sol Estes
Billy Sol Estes's picture

Stopped reading when he got to the part about 'Romney should have won 2012.'

Fri, 03/14/2014 - 11:10 | 4547984 LawsofPhysics
LawsofPhysics's picture

Please, when it comes to ownership, The Fed is NOT the government.

Fri, 03/14/2014 - 16:47 | 4549647 Kirk2NCC1701
Kirk2NCC1701's picture

True. But I think he's saying that the Gov will be the PMC (Prop. Mgmt. Co.) for the Owners.

You know how these Arms Length biz relationships work. ;-)

Fri, 03/14/2014 - 11:42 | 4548158 yogibear
yogibear's picture

Called property taxes.

Fri, 03/14/2014 - 10:34 | 4547823 KickIce
KickIce's picture

I hope you get a bazillion up arrows (in the true spirit of Zimbabwe) because your post is spot on.

Fri, 03/14/2014 - 10:41 | 4547860 El Vaquero
El Vaquero's picture

Right, but the paper work is going to be so fucked up that they'll have a fun time proving that they own any one single mortgage.  Fraud is the status quo.

Fri, 03/14/2014 - 10:49 | 4547877 Neo
Neo's picture twelve old white guys in New York own all the property in the country, so what?

It will mean nothing when SHTF.


Fri, 03/14/2014 - 11:19 | 4548029 KickIce
KickIce's picture

Except they also own the MIC.

Fri, 03/14/2014 - 10:54 | 4547905 constantine
constantine's picture

Precisely why everybody who has been telling you that homes shouldn't be bought because they're in a bubble are short-sighted.  If you have the cash to buy a small home and still have some left over, I think that it's a good plan.  Bought a home in late 2009.  I could probably sell it for the same amount that I bought it for... however, I can rent it out for a lot more right now than I could when I bought it.

Fri, 03/14/2014 - 21:49 | 4550695 MeelionDollerBogus
MeelionDollerBogus's picture

I can think of a few reasons why you would not or could not.

  1. What if no one's around with money to pay rent, due to no jobs?
  2. What if those who have rent money are drug dealers?
  3. What if those who have rent money are on welfare, maybe come up short frequently?
  4. What if ownership of your house is illegally transfered to a bank but deemed legal by a court, so only that bank can rent while in particular you are made homeless?
  5. What if SHTF and you can't take your investment with you, whereas otherwise you could have tangibles in pocket, bug-out bag, car(s) and be gone? A rental has a monthly cost but no sunk cost for equity.
  6. What if your city/town decides you didn't pay your taxes, but you did, puts a lien on the property & confiscates it for lawful sale "at market value" (so they say) when they say (not your choice anymore)?

See how this can go? Maybe where you live these aren't relevant factors. If where you live is in the USA all of them are relevant at the same time. Notice which item listed mentions "bubble". Ya, that's right.

Fri, 03/14/2014 - 15:41 | 4549311 Miffed Microbio...
Miffed Microbiologist's picture

Unfortunately Operation Bedford Falls-----> Pottersville had been employed long ago. It's pretty much over for most of us caught in the web now. The only option now is having an escape plan and physical survival.


Fri, 03/14/2014 - 17:13 | 4549773 free_lunch
free_lunch's picture


Talking about ownership..


A quote from Middelkoop's new book "the big reset":  


"Since  the beginning of 2003, there has been an agreement between Japan and the US to support financial markets by buying  equities. Authorities in Hong  Kong have admitted that  they supported the Hong Kong  stock exchange during the Asia Crisis  of  1998. In  a  2013  survey of 60 central  banks by Central Banking Publications and RBS,  23% said they own  shares in  listed companies or plan to buy them"


Fri, 03/14/2014 - 10:21 | 4547741 GubbermintWorker
GubbermintWorker's picture

And a way to buy moar gold.

Fri, 03/14/2014 - 10:54 | 4547903 Ifigenia
Ifigenia's picture

not only, just a few more countries that was destroyed in the past, since 1945, by USA democracy, or those who fear one day would be helped by Nulland to get democracy. All those dictators are enemy of democracy, they hate our freedom.

Fri, 03/14/2014 - 11:22 | 4548048 Againstthelie
Againstthelie's picture

If I were a Russian, I would definately be worried about the upcoming USraeli sanctions and stayin in their banking system. That they are robbing foreign investments and even national gold, has been proven in the last years several times.

So maybe it's more a flight to safety from private and institutional holders? Also not a good sign of trust into the USD, but a different reason (for now).

Fri, 03/14/2014 - 16:59 | 4549690 Kirk2NCC1701
Kirk2NCC1701's picture

Besides the not-so-subtle way of saying FU, it could also be the Russian gov and its Oligarchs reducing their US exposure to asset freezes.

IOW, also hedging their bets. Gives them more negotiating power to complement their military moves -- thus increasing their options for a flexible response, and makes it more difficult for the US to front-run them.

Global Stratego.

Fri, 03/14/2014 - 11:26 | 4548077 TaperProof
TaperProof's picture

QE-deathblow , the final QE

Fri, 03/14/2014 - 10:02 | 4547625 Timmay
Timmay's picture

Now That, is what you call a red line.....

Fri, 03/14/2014 - 10:32 | 4547811 furgheddubouddit
furgheddubouddit's picture

Why would they need warming up?

They've been running full bore for the past 6 years.

Fri, 03/14/2014 - 13:10 | 4548566 TruthHunter
TruthHunter's picture

So, somebody is dumping Treasuries

Its a long way back to 2008 levels

Move along, nothing to see here.

Fri, 03/14/2014 - 13:10 | 4548593 scythian empire
scythian empire's picture

How is this comment relevant at all?  if the selling were large enough to devalue the currency substantially, wouldn't there be an incentive to not devalue?


Oh, groupthink and lack of understanding and consiparcy theories.  Forgot where I was.

Fri, 03/14/2014 - 09:57 | 4547587 Azannoth
Azannoth's picture

This is the Real-real Realpolitik

Fri, 03/14/2014 - 09:57 | 4547588 Hippocratic Oaf
Hippocratic Oaf's picture

Let it rain, motherfuckers!

Fri, 03/14/2014 - 10:02 | 4547622 VD
VD's picture


Fri, 03/14/2014 - 10:06 | 4547658 stant
stant's picture


Fri, 03/14/2014 - 10:39 | 4547849 prains
prains's picture

it's times like these I need National Festuring to come pimp his blog so I can feel like the world is still normal

Fri, 03/14/2014 - 10:51 | 4547867 sgorem
sgorem's picture

is that the infamous RED LINE HorseHead Kerry keeps rantin' about? looks like someone is making a statement................REtaliation's a bitchez!

Fri, 03/14/2014 - 11:11 | 4547986 CrashisOptimistic
CrashisOptimistic's picture

Well, on the contrary, bearing in mind we're at 2.63% down from 3% 1 Jan, whoever is buying from those sellers is doing so greedily and willing to pay up the price in order to get that merchandise.

Fri, 03/14/2014 - 11:30 | 4548097 midtowng
midtowng's picture

This is weird. It doesn't make sense unless it was a goivernment.

Fri, 03/14/2014 - 12:02 | 4548253 gatorengineer
gatorengineer's picture

with all that selling that must be the reason the prices have fallen drastically.... Oh wait a minute....

Tyler please get a fact checker.......

Fri, 03/14/2014 - 12:25 | 4548375 turicum
turicum's picture

This will be Belgium's opportunity.

Fri, 03/14/2014 - 09:54 | 4547552 Capitalist
Capitalist's picture

I read somewhere that Russia was behind this just in case sanctions affect their holdings.

That or there's a central bank selling treasuries and buying gold.


Fri, 03/14/2014 - 10:19 | 4547727 101 years and c...
101 years and counting's picture

quick question: how does one sell a shitload of UST and rates not go parabolic?  

Fri, 03/14/2014 - 10:27 | 4547770 Ayr Rand
Ayr Rand's picture

If Russia is once again an invading empire... where are the other safe havens?

Europe: Ukraine is in Europe...

China: Has been accruing debt at 4x the rate of the US over the last 5 years, has enormous problems of its own...

Russia: Low debt levels only because it already defaulted. Increasingly warlike (though give the benefit of a doubt until we see what happens in Ukraine). Economy based entirely on oil, with global demand dropping...

Fri, 03/14/2014 - 10:38 | 4547848 HoofHearted
HoofHearted's picture

Agriculture is the safe haven, but you have to have a regime that isn't going to tax the shit out of you for producing it. So, I'm stumped, unless you consider the US with all its ag subsidies...just be in debt up to your eyeballs in an inflationary time. Make sure you have invested in tangible items of value.

Fri, 03/14/2014 - 11:16 | 4548019 CrashisOptimistic
CrashisOptimistic's picture

The problem with that scenario is bond yields are falling sharply, which signals to all the world who is impartial that economies globally are falling and weakening -- which is how deflation happens.

This is what bonds are saying, and the buyers of them are greedy for more of them and willing to pay up the price to get them, because that's what you do in deflation.  Own bonds.

Fri, 03/14/2014 - 11:42 | 4548162 Ifigenia
Ifigenia's picture

"This is what bonds are saying, and the buyers of them are greedy for more of them and willing to pay up the price to get them, because that's what you do in deflation.  Own bonds"


Pity those guys dont know, they went into Kiev and bring back 40 tons of gold.

Fri, 03/14/2014 - 16:20 | 4549522 Quantum Nucleonics
Quantum Nucleonics's picture

That's why ag is NOT a safe haven.  Maybe if you had bought ag land years ago before prices went parabolic.  Plus, as Argentina shows, if it's within reach they can tax it and they can take it.

Fri, 03/14/2014 - 09:53 | 4547556 Thought Processor
Thought Processor's picture



Now we're really going to see how much the FED can soak up.   

Fri, 03/14/2014 - 09:59 | 4547607 Winston Churchill
Winston Churchill's picture

Doesn't matter.It what the foreigners do with those dollars they just got that

counts.From the dollar index over the same period its apparent they are selling dollars raised

from UST sales.

What are they buying ,that is what counts.

Fri, 03/14/2014 - 10:01 | 4547621 LawsofPhysics
LawsofPhysics's picture

^^^this.  Treasuries are very much fungible, it will be how those funds are spent that matters.

Anyone have any real insight on where it will go?  My guess it the MIC in europe will see a large part of that.

Fri, 03/14/2014 - 11:18 | 4548027 CrashisOptimistic
CrashisOptimistic's picture

LoPdood, my read is influx to bond funds.

The population ages, even those with money age.  The old own bonds.  The tranditional asset allocation is your age in bonds.  If you're 70, then 70% of your portfolio should be bonds.  That is what they were taught their whole lives and that is what they will do.

Fri, 03/14/2014 - 11:46 | 4548173 LawsofPhysics
LawsofPhysics's picture

Unless you have to cash those bonds in to pay for other things of course.  Like food, fuel, your grandchildren's education or healthcare.

You might also want to do some homework on what percentage of the "aging population" actually holds bonds "dude".  The majority of the aging population is in fact dependent on social security and medicare/medicaid.

Fri, 03/14/2014 - 11:53 | 4548198 CrashisOptimistic
CrashisOptimistic's picture

That is, of course, true, but the rule of thumb is the rule of thumb.  Your age in bonds.  The investing public spent their lives knowing that and that's where their IRAs and 401Ks are going to allocate.  60 yr olds asset allocate to 60% bonds.  65 yr olds -- 65%.

Fri, 03/14/2014 - 12:08 | 4548292 LawsofPhysics
LawsofPhysics's picture

Again, how many retired 60 yr olds have 401ks and IRAs?


Fri, 03/14/2014 - 11:31 | 4548105 Headspace
Headspace's picture

"My guess it the MIC in europe will see a large part of that."

probably these guys


Fri, 03/14/2014 - 10:05 | 4547644 dontgoforit
dontgoforit's picture

Secrets, governents and the latest high-tech military equipment, for starters...  Gonna' beat us with our own money - O the irony!

Fri, 03/14/2014 - 10:32 | 4547810 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

If it was me and I was the Chinese. I'd be buying up new etf contracts in the Comex and asking for delivery on gold at the same time for about the same amount of as new contracts taken out. If you can empty the vaults and control the paper no need to bust the scam since they can effectively control the price at that point with that paper while holding all the gold. Not a fucking thing the Comex can do at that point except go along with it.

Fri, 03/14/2014 - 10:05 | 4547650 magpie
magpie's picture


The point of the exercise is to demonstrate that the treasuries can become illiquid instruments in the near to middle term.

Fri, 03/14/2014 - 09:53 | 4547558 Theta_Burn
Theta_Burn's picture

Watch out for that first step...

Fri, 03/14/2014 - 09:54 | 4547560 MeMongo
MeMongo's picture

Ho Lee Fuk!

Fri, 03/14/2014 - 10:01 | 4547616 THX 1178
THX 1178's picture

Dang Dat Fukt

Fri, 03/14/2014 - 09:54 | 4547561 e-recep
e-recep's picture

Taper this, Yellen! Russians respond to sanction talks. Probably some Chinese, too.

Fri, 03/14/2014 - 09:54 | 4547562 LawsofPhysics
LawsofPhysics's picture

100 billion?  < Meh > Is this even a drop in the bucket?

Fri, 03/14/2014 - 09:55 | 4547574 Dr. Engali
Dr. Engali's picture

Death by 1000 paper cuts.

Fri, 03/14/2014 - 12:21 | 4548354 RSloane
RSloane's picture

Exactly right, Doc.

Fri, 03/14/2014 - 09:56 | 4547580 e-recep
e-recep's picture

More than a drop, actually. Tapering plan is about $10bnx12=$120bn PER YEAR and it created havoc in the EMs.

Fri, 03/14/2014 - 09:58 | 4547599 LawsofPhysics
LawsofPhysics's picture

What part of "ALL paper will go to zero" don't you understand?

Fri, 03/14/2014 - 10:07 | 4547666 dontgoforit
dontgoforit's picture

True,LoP, but once this small shit storm becomes a typhoon shit storm and the folks can't buy food for their families, then the real meltdown commences.

Fri, 03/14/2014 - 11:48 | 4548186 LawsofPhysics
LawsofPhysics's picture

You obviously don't follow my posts, I have been saying that from day one.  Nothing changes until the supply lines break in earnest.

I remain long sharecropping and all kinds of physical assets of real value.

Fri, 03/14/2014 - 12:07 | 4548279 dontgoforit
dontgoforit's picture

I am mindful of your posts, LoP, and I esteem you opinions.

Fri, 03/14/2014 - 09:59 | 4547601 Rainman
Rainman's picture

loose change lost in the couches or 7 weeks of QE

Fri, 03/14/2014 - 10:52 | 4547886 SheepDog-One
SheepDog-One's picture

Pretty funny, considering $100 billion represents 1/10th of all US Dollars in existence, official number being somewhere between $800 billion-1 trillion.

Fri, 03/14/2014 - 10:08 | 4547670 astoriajoe
astoriajoe's picture

$100 billion in a  week>>5.2 trillion in a year doesn't seem like much to sneeze at.

Fri, 03/14/2014 - 09:55 | 4547569 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Another dead canary...Hmmmm.

Fri, 03/14/2014 - 09:55 | 4547570 auntiesocial
auntiesocial's picture

this just in- 

Fed creates accounting jobs in the financial sector...

Fri, 03/14/2014 - 09:55 | 4547571 BaggerDon
BaggerDon's picture

If they selling bonds, why dont rates rise?>??

Fri, 03/14/2014 - 09:58 | 4547596 Robot Traders Mom
Robot Traders Mom's picture

Because the Fed has endless liquidity (money printing) to keep the bid side firm. 

Fri, 03/14/2014 - 10:00 | 4547603 Dr. Engali
Dr. Engali's picture

In the grand scheme of things 100 billion means nothing and the fed can pick that up in a heartbeat. However, this could be a warning shot and that is something else in it's entirety.

Fri, 03/14/2014 - 16:53 | 4549668 Gief Gold Plox
Gief Gold Plox's picture

I think you're spot on. I'd only remove the "could be" part. It's the biggest drop of treasuries held by the fed to date. It's a warning shot, a pretty damn good one. I'd say the Russians are behind it, but not directly. Perhaps through China or some other friendly nation. I wonder, being a huge energy exporter, are they selling it for USD or have they pulled a Saddam already? If not, I'm considering that their "nuclear option"

Fri, 03/14/2014 - 09:56 | 4547586 soopy
soopy's picture

I have to lol a bit every time I see "It begins..." Why. So. Dramatic?

Fri, 03/14/2014 - 09:59 | 4547606 Hulk
Hulk's picture


Fri, 03/14/2014 - 09:57 | 4547589 Robot Traders Mom
Robot Traders Mom's picture

"He fixes the cable?"


-Jeff Lebowski

Fri, 03/14/2014 - 09:57 | 4547591 NotApplicable
NotApplicable's picture

Are they sellin', like, to Yellen?

Fri, 03/14/2014 - 10:10 | 4547678 dontgoforit
dontgoforit's picture

Goes on our tab, I believe.  Another truckload of Dom Perinot '57 for every non-American!

Fri, 03/14/2014 - 09:58 | 4547597 JailBank
JailBank's picture

So now we need more QE and less QE?

Fri, 03/14/2014 - 09:58 | 4547600 elwind45
elwind45's picture

Yuan to appreciate 4 what reason? I must have missed the epilogue

Fri, 03/14/2014 - 10:01 | 4547614 firstdivision
firstdivision's picture

Well the commercial paper market is about to shit the bed there.

Fri, 03/14/2014 - 09:59 | 4547602 firstdivision
firstdivision's picture

Yellen: "That's all you got?  That's like 10 minutes of POMO. Bitches"

Fri, 03/14/2014 - 09:59 | 4547604 monopoly
monopoly's picture

It is not a big deal. They do not own many US bonds or Treasuries......OH, they do? Never mind.

Fri, 03/14/2014 - 10:01 | 4547605 overmedicatedun...
overmedicatedundersexed's picture

gold is reacting to this, and is a warning to the west, your fiat is very very easy to weaken, we will buy gold until our goals in ukraine are complete...yellen and other cb's across the west just got punched in the nose. she is shocked and dazed how dare they, well they dare.

Fri, 03/14/2014 - 10:01 | 4547615 lakecity55
lakecity55's picture

China and Russia: "Ha ha, Yanquis, your military cannot work if you cannot pay for fuel. Leave us alone or we'll dump enough to prevent you from servicing your debt, hahahha."

Fri, 03/14/2014 - 10:01 | 4547618 elwind45
elwind45's picture

Wow such big number they should mean something? If it was out of control!

Fri, 03/14/2014 - 10:02 | 4547626 sudzee
sudzee's picture

Selling US buying bunds. Euro to 1.50.

Fri, 03/14/2014 - 10:11 | 4547689 agent default
agent default's picture

What do you think will happen to the Euro if Russia gets serious?

Fri, 03/14/2014 - 10:30 | 4547745 Kirk2NCC1701
Kirk2NCC1701's picture

Merkel wouldn't have to ask for Germany's gold.  They could buy it.  ;-)

Seriously, their US exports would tank.  Only the elite Audi, BMW and MB crowed could affort German cars.

On the other hand -- thumb and 4 fingers -- it would make Gas for Gold and Oil for Gold purchases easier for them, given that Gold is priced in USDs.  ;-)  This would front-run America's attempt to replace Russian gas to the EU with America's LNG, since such a move would cut off Putin at the knees and end the New Russia.

At this point, it's a "foot-race".

Fri, 03/14/2014 - 11:23 | 4548057 CrashisOptimistic
CrashisOptimistic's picture

As has been explained to you over and over, gold has no function in Russian day to day society.  They have no reason to take something they cannot use for oil.

OTOH, they can drain cash from their enemies at the rate of $260 billion/year for just the oil.  The gas is more.  Then turn that money around buying things they want.  Like aircraft carriers that france is building for them.  This is, with obfuscation, slave labor.

Fri, 03/14/2014 - 10:03 | 4547627 Son of Captain Nemo
Son of Captain Nemo's picture

Janet Yellen made a few calls...

Then asked her secretary to book flight(s) for Moscow and Beijing!

Fri, 03/14/2014 - 12:27 | 4547956 Ifigenia
Ifigenia's picture

They made a condition. From US they only accept malaysian airline

Fri, 03/14/2014 - 10:03 | 4547630 SheepDog-One
SheepDog-One's picture

And who is soaking up all this worthless paper? that they're selling? OH wait....I forgot about Obunglers 'MyRa' mandatory serf purchase of all outstanding bonds. Enjoy!

Fri, 03/14/2014 - 11:06 | 4547961 Ifigenia
Ifigenia's picture

ukranianias friends with their 40 ton gold

Fri, 03/14/2014 - 11:25 | 4548070 CrashisOptimistic
CrashisOptimistic's picture

The rule of thumb is old folks have their age in bonds.  70 year olds should have 70% of their holdings in bonds.

And they do.  So their holdings in bonds increase -- and they are bidding them up to get them.  That's what you do in deflation.

Fri, 03/14/2014 - 13:26 | 4548655 The Most Intere...
The Most Interesting Frog in the World's picture


Fri, 03/14/2014 - 10:03 | 4547633 the 300000000th...
the 300000000th percent's picture

Sorry for the noobish ignorance but how can China sell a treasury bond the fed holds? I thought China would sell a bond they have and the fed would buy it up. The article says "

Foreigners Sell A Record Amount, Over $100 Billion, Of Treasurys Held By The Fed In Past Week"
Fri, 03/14/2014 - 10:21 | 4547737 The Most Intere...
The Most Interesting Frog in the World's picture

I believe this is a "custody account".  This is similar to having an ira account and your broker is the custodian, you are the owner.  Here, China/Russia, whomever owns the bond and Fed is simply the custodian.

My question is, who was the buyer?????

Fri, 03/14/2014 - 13:21 | 4548630 zerozulu
zerozulu's picture

Just like printer there must be a shredder. I think

Fri, 03/14/2014 - 10:24 | 4547767 Skin666
Skin666's picture

Foreigners buy US debt.


Foreigners are now dumping US debt.


More debt for the FED to monetize... Until it can't...

Fri, 03/14/2014 - 10:04 | 4547642 AL_SWEARENGEN

This could also be called BRIC Sanctions against the wast.

Fri, 03/14/2014 - 10:04 | 4547643 shanearthur
shanearthur's picture

Which way will the puppeteers make the market dance today?

Fri, 03/14/2014 - 10:05 | 4547646 Johnny Cocknballs
Johnny Cocknballs's picture

Wow, how will Yellen and Fischer respond?

.gov may be instructed to get that Iran war going stat.



Fri, 03/14/2014 - 10:09 | 4547673 Son of Captain Nemo
Son of Captain Nemo's picture

The same way that Alan Greenspan did with G.W. in 2003 before the invasion of Iraq ...

"Give me a war"!

Fri, 03/14/2014 - 10:08 | 4547675 El Hosel
El Hosel's picture

No worries, Bonds look ready to breakout.... another 200 or 300 down for "the market " today or Monday should do it. 

Fri, 03/14/2014 - 10:06 | 4547657 HpDeskjet
HpDeskjet's picture

Great, so the people that went buying stocks/HY/etc. because "the FED told them so" can go back and buy treasuries again. The bond market will crash last (if ever), stocks however can suffer a lot from current levels

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