As The US Is To "Belgium" Treasury Buying, So France Is To ...

Tyler Durden's picture

As is now well-known, following the news broken first by Zero Hedge in May, Belgium, or rather "Belgium" (because clearly someone is using Belgian-based Euroclear as a front to cover their insatiable appetite for US paper) has emerged as the biggest buyer of US Treasurys in 2014, close to surpassing even the Federal Reserve as the biggest monetizer of the US deficit.

But what about other countries in the world, such as for example France: a country whose economy virtually everyone admits is in shambles, and yet whose bond yields have followed the rest of the world to slide to near record lows, hitting a tiny 1.70% most recently.

Here is the answer.

According to the just released balance of payments data from Japan, the top destination of Japanese offshore bond portfolio investments was.... France, followed in the #2 position by none other than the US.

Considering it is now everyone's patriotic duty to sell Treasurys (because otherwise the fabrication that the US economy is improving crashes and burns every time there is a concerted bond buying effort), one wonders how long until the US tells Kuroda and the Japanese Pension Funds that US paper is non-grata for purchases going forward.

As for France, we are confident they will gladly take every foreign bond purchaser they can find.

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Croesus's picture

Crash, here we come! 

kliguy38's picture

Remain calm with your seatbelts fastened......for those of you that don't believe that bend over and kiss your ass goodbye

Manthong's picture

So they do a real stress test and discover it is all Sushi?

.. and not fresh.

Spitzer's picture

Kyle Bass, where are you ?

 

Told you math didn't matter. Who cares if all Japanese die , France will buy their bonds.

Stuck on Zero's picture

The real task is to guess which shell has a pea under it.

CrashisOptimistic's picture

Actually that's not the real task.

The real task is civil lawsuit against Yellen, which would force her to testify under oath, and while she is under oath ask the hard questions.

That's when it gets interesting.  Have to find a lawsuit that is close enough in relevancy that those hard questions can be asked.

 

Recall that it was a lawsuit over sexual harassment that permitted the Monica Lewinsky questions while Clinton was under oath.  So a Yellen lawsuit over some financial matter in which she was involved might open the door during deposition.

eddiebe's picture

It will never happen, but if it did, she'll lie like a dog.

SAT 800's picture

Thinking about this article made me laugh. Japan is buying France's Euro Bonds; with what? I had the thought that this process resembles a team dog-paddling event. Japan has it's right arm tied around france's waist, and France their left arm tied around Japans waist; they are both up to their chins in the ocean; japan calls out, "okay, I'm going to paddle with my left hand, now; and France replies, okay, now I'll paddle with my right". At best, it's a kind of a Laurel and Hardy imitation of international finance; at worst; it's merely a farce. Compare this to 1949; when Japan had to transfer Gold to France if they bought some part of France's output. As the Women's cigarette ads say, "you've come a long ways baby".

SAT 800's picture

We're not really losing altitude; the ground is just rising a lot lately.

Bernoulli's picture

Is that 2 Trillion YEN "France" supposedly spent? Not so much...

Anyways, Lagarde is behind this. All makes sense now.

Headbanger's picture

Detroit traffic jam no doubt..

SAT 800's picture

Thank You Belgium; for buying so many US War Bonds; I had no idea we needed so many waffles.

LawsofPhysics's picture

"sell treasuries"?  WTF?  If that was the case yields would be going up.  They are not, they cannot!

FAIL on this article.  Saying that "the french like radioactive sushi" is just as viable an explanation at this point.

Dr. Engali's picture

That is what Tyler is saying. Nobody will sell treasuries advancing the illusion that the eCONomy is improving. They instead continue to buy forcing yields down suggesting that the eCONomy is still in trouble.

LawsofPhysics's picture

Aside from bond traders, I don't know many people who actually own treasuries, at least not treasuries with these historically low yields.  I do know some old-timers with treasuries that are maturing with yields that are substantially higher. 

This is by design as the central bankers now own the treasury "markets" of the world.  Even these "highly educated" people still fail to understand that, in the absence of faith, all fiat will go to zero.

same as it ever was...

Dr. Engali's picture

Treasuries are important as collateral in order to maintain the current system. There are  still a large amount of treasuries being bought by hedge funds for the carry trade. The feds control enough where they can control the rates and may end up owning them all eventually, but not yet. 

centerline's picture

Until something dramatic happens in terms of soveriegn protectionism, this is a game of everyone going to thier knees simultaneously.  Eventually something will crack.

This very process however is what assures us of a cascading global clusterfuck.  Everyone has their eyes on critical resources (each with their own free shit army barely pacified), barely hanging onto power, and trying to push thier neighbor into their own zombie apocalypse first.

CrashisOptimistic's picture

Guys, every retirement mutual fund in the US has US Treasury allocation % as a requirement in the bylaws.

There's no scarcity of buyers. They exist systemically.  The funds all buy Treasuries.  Every day there is a maturing event they buy, in order to maintain their bylaw mandated asset allocation reqmt.  It's auto pilot rebalance.

And as equities advance, to hold the bylaw % in place, they have to buy even more US Ts.  If equities fell, they don't have to sell US Ts because the US T asset allocation reqmt in the bylaws is a MINIMUM, not a target.

Dr. Engali's picture

Yes, I know. Insurance companies continue to buy in order to hedge their positions as well.

Imagery's picture

Doc, you forgot the sarc disclaimer.  If what you say is true, we really have entered the Twilight Zone and I can tell you what will soon "break", ie, the insurance companies!  Buying USTs with +- Negative 4% Real Yields to "hedge" against lesser losses just about anywhere else is truly beyond my pay grade for rationalizing.

Dr. Engali's picture

1) I never use Sarc disclaimers. If people don't get sarcasm then fuck them and their stupidity. 2) insurance companies are buying treasuries hand over fist, however lower rates mean they have to lower benefits and raise costs. They are in a precarious place right now.

LawsofPhysics's picture

The question is whether or not those mutual funds will be sacrificed or not?  I have often wondered if Bill Gross was simply "planned opposition" or not.  Go ahead, sacrifice all those pensions, I dare you...

SAT 800's picture

In 1905 highly educated people; Physics Professors, believed in the Luminiferous Ether; right now, highly educated people believe the 3.7 Co2 molecules in every 10,000 air molecules have an important effect on the heat balance of a planet; People are much, much, stupider then they know.

Davos's picture

i particulalry like phlogiston theory

MrSteve's picture

Being in quibble-like mode, I think you misspelled particularly and flogiston has never existed, so its spelling is whatever you want it to be...

donsluck's picture

SAT 800 - Before industrialization the CO2 concentration was 280 parts per million or 2.8 Co2 molecules in every 10,000 air molecules. It now exceeds 4.0. That's a 43% increase in what is normally a very stable ratio. To discount effects due to small numbers is, shall we say kindly, simple. As you should be aware, life is not simple. See http://www.acs.org/content/acs/en/climatescience/greenhousegases/industrialrevolution.html

Cognitive Dissonance's picture

This is not the sarcasm you are looking for.

christofay's picture

Yeah, sell Ts? Otherwise okay hearding Nips into Francs

 

eddiebe's picture

I don't understand. Why would the US tell Japan to quit buying our debt?

donsluck's picture

The FED (not in any way the US) would like US interest rates to go up JUST ENOUGH to signal an "improvement" in the US economy. Silly, I know.

Incubus's picture

importing mongols to battle the islamic invasion

Kaiser Sousa's picture

and heres how fiercely they r attempting to keep Silver away from $21 and double digit change....

http://www.pmbull.com/silver-price/

http://www.silverseek.com/

http://www.kitco.com/charts/livesilver.html

youngman's picture

French Bonds smell and they do not shave

astoriajoe's picture

I reckon the bonds will receive something of a shave at some point in the future.

SAT 800's picture

They'll be as hairless as a Eunuch and as impotent.

Analyse2's picture

@youngman

By emitting these kind of racist comments, you are discrediting yourself.

Sudden Debt's picture

France has cracked down a bitcoin "trafficer" and seized all the bitcoins.

Brussels is also looking into it and so is spain.

Sudden Debt's picture

why would you want to do that?

Spitzer's picture

They  are going after these BTC guys in meat space. Not cyber space.  Most of the silkroad guys were caught in meat space too

SAT 800's picture

There's a delusion born every day; and a fool to support it.

buzzsaw99's picture

damn, jap investors really have gone meshugenah

americanspirit's picture

Usually when an entity is accumulating the 'paper' of a targeted company it is because they have a plan. In this case there must be a plan for the US that will be executed when their holdings reach a certain level. Unless somebody out there thinks they are going to get rich at under 1% interest, I have to assume that they have some strategic reason for all the Brussels buying. And since it is happening in secret ( come on NSA, tell us) chances are that the outcome for the US will not be a happy endng.

And yet I have not seen a single dicussion of what that plan may be, nor of the potential consequences. This "Brussels" buying has been going on long enough that I suspect the goal of whoever is doing it must be nealy achieved.

I am somehow reminded of a flock of turkeys in a heavy rain, gaping at the sky, beaks wide open, understanding nothing, drowning.

centerline's picture

Sizable position makes for a big stick.  Gets attention when attention is needed.  Or, can be used as blunt instrument of course.  Or, simply to move markets if played right.

Oquities's picture

if i were the U.S., i would push for SDRs sooner rather than later, given trade settlements done and proposed by BRICs, Iran, Russia and some of Europe.  that way my monetary scare would be blunted, instead of a potential $USD run when crisis hits.  these inter-border Treasury bond purchases may reflect final shuffling of debt among the conspirators (nations and people) to adjust off-kilter country balances pre-default, and pro-rata re-assignment to the SDR unit.