Revealing The Identity Of The Mystery "Belgian" Buyer Of US Treasurys

Tyler Durden's picture

A little over a year ago, we showed something quite unexpected: in the span of just a few months, the tiny nation of Belgium had become the third largest foreign holder of US Treasurys.

Of course, the buying wasn't Belgium doing so for its own account, but someone using the custody services of Belgium-domiciled Euroclear. This is what we said last April.

it is quite clear that Belgium itself is not the buyer. What is not clear is who the mysterious buyer using Belgium as a front is. Because that same "buyer", who to further explain is not China, just bought another whopping $31 billion in Treasurys in February, bringing the "Belgian" total to a record $341.2 billion, cementing "it", or rather whoever the mysterious name behind the Euroclear buying rampage is, as the third largest holder of US Treasurys, well above the hedge fund buying community, also known as Caribbean Banking Centers, which held $300 billion in March.


In summary: someone, unclear who, operating through Belgium and most likely the Euroclear service (possible but unconfirmed), has added a record $141 billion in Treasurys since December, or the month in which Bernanke announced the start of the Taper, bringing the host's total to an unprecedented $341 billion!

And while there had long been speculation that the mystery buyer using anonymous Belgian custody accounts is none other than China, the same nation which previously had used UK accounts precisely for the purpose of masking its purchases, there was never any proof.

Further confounding the analysis was that while "Belgium" was massively adding to its Treasury holdings over the past year, mainland China was telegraphing that it was dumping Treasurys. It got to the point that in February Japan officially surpassed China as the largest official US foreign creditor.


Then, on Friday we finally got if not direct, then certainly indirect, evidence from this month's TIC data that "Belgium" was merely a front for China.

First, note that after dropping for 6 consecutive months, official Chinese holdings had a major countertrend move and rebounded in March, jumping by $37 billion to $1.261 trillion and regaining the top US creditor spot from China.


Even more curious was the Belgian Treasury holdings update, which after flatlining in the mid-$300 billion range for one year, also had a sharp countertrend move as they suddenly tumbled by $93 billion in the month of March, a 27% of the total "Belgian" holdings.


But the real surprise emerges when stacking the monthly Chinese and Belgian holdings on top of each other. One gets the following chart, which in itself is hardly shocking...


... but becomes so when one also overlays China's offically reported monthly Forex reserves on top of the consolidated China+Belgium treasury holdings. Here one can easily see that indeed Belgium was nothing but an "anonymous" front for Chinese Treasury buying...


... and as the case has recently become, selling.

Because while we have previously commented on the dramatic capital outflow from China in recent months, which also explains why China is desperate to slam its currency but will not do it over fears of accelerating capital outflow, the combined Chinese and Belgian Treasury holdings reveal the true extent of China's USD-denomination liquidation conundrum.

As the next and final chart shows, in March the monthly drop across China's official and "anonymous" i.e., Belgian holdings, was the biggest on record!


So as a result of the latest TIC data we know know with almost complete confidence that:

i) "Belgium" is, or rather, was a front for China: either SAFE, CIC, or the PBOC itself.

ii) That Belgium's holdings, after soaring as high as $381 billion a year ago, have since tumbled back to only $2532 billon as China has dumped the bulk of its Euroclear custody holdings, and that once this number is back to its historical level of around $170-$180 billion, "Belgium" will again be just Belgium.

iii) China's foreign reserves tumbled and this was offset by a the biggest quarterly drop in Chinese pro-forma treasury holdings, which dropped by a record $72 billion in the month of March, and a record $113 billion for the quarter.

So why mask its offshore holdings? So when China proceeds to liquidate nearly $100 billion via its custody account, the US didn't feel compelled to chastise Beijing. After all there is no official confirmation that Belgium is indeed China, and likely won't be - it was merely a buffer account which China used to build up TSY holdings in, and now - to rapidly liquidate.

A better question perhaps is what is the use of funds of these tens of billions of liquidations: because what was once invested in the form of Treasurys is now invested in the form of something else... most likely real estate in San Francisco, Beverly Hills, or New York City, with a few billion left over to buy stocks.

Finally, the last thing China would want the world to know, is just how acute its capital flight truly is: a capital flight which is the only thing that is preventing the Politburo and the PBOC from cutting rates even more aggressively and/or engaging in even more outright QE than it currently does because should the chart above be matched with a comparably sharp drop in the Renminbi, and suddenly the VIX closing the day at 12 will be a very distant memory.

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knukles's picture

Just for shits and grins, the Narrative of the Garland Texas shooting changed form lone traffic cop savior to full "preparedness, SWAT teams, business evacuations before hand, FBI involvement" etc.

Always just a drill.

PS and as for China, I've speculated many a time, it's an official organization account from China dealing in the public marketplace rather quietly instead of through the Treasury/Fed.
And golly gosh.  Now the point become what's the motivation?
Kinda hard for the Treas/FED to threaten to take away your assets if they don't know who has 'em when in a nominee name offshore.
Now it makes sense.
The Chinese don't trust the US one iota and look like they expect Big Trouble Along the Potomac

And all this time we were told the problem was the NORKS cybering Sony.

Look!  It's a Kim Il with a Sparkly Unicorn Ding Dong on his head
Mommy, I want a Sparkly Ding Dong on my forehead, to, mommy!  Mommy!

Dollarmedes's picture

It was China...unless that's what we were MEANT to believe! : O

BuddyEffed's picture

Why would China want to or need to hide their hand in this?

Can't they purchase Treasuries in a more normal fashion?

LianaKaulitz's picture

What world is this website talking about?
The government runs the Fed and the government is interfering in the market?
The Fed is 100% owned and controlled by the banks.
The Fed is the reason the government has to tax you.
The market is 100% manipulated by the banks. It creates shit the market doesn't need. It breaks the market. The market fails to punish the banker parasites. The market fully subsidizes the banks but that's not enough, the government subsidizes the banks and they get to commit dozens of crimes with impunity.
So WTF is Tyler talking about with this government "central planning" shit?

Manthong's picture

Spain is not Uganda.

Belgium is not China, and..

D.C. is not Kenya (although you couldn't tell from walking around IAD).


Future Jim's picture
Relax! US Federal Debt – Problem Solved

The American government has been spending trillions of dollars on programs it had no Constitutional authority to create, and such unconstitutional expenditures exceed the amount of the federal debt. Therefore,

The federal debt is unconstitutional.

Not only are most government programs themselves unconstitutional, but the debt used to pay for these unconstitutional programs, which were created by previous taxpayers, is paid for by future taxpayers. Therefore,

The federal debt is Taxation without Representation.

Taxation without representation is also unconstitutional. In fact, it is the reason America seceded from the British empire.

Given that the US Constitution is pretty simple, then anyone who loaned money to the US government should have known that they were loaning money to a fraudulent and illegitimate enterprise and thus should not expect repayment.

Of course, there would be a huge consequence – no one would be willing to loan money to the US government again until it started obeying the Constitution, which would be ...


ATM's picture

I still believe the mystery buyer is the Fed.

smlbizman's picture

constitution.....thats funny,,,,,,

smukster's picture

Tylers and Folks, this is nonsense.

You're just playing with numbers, but don't offer any explanation - bc. you don't seem to understand that this is politics, not markets.

While I wouldn't call your version impossible, there is a far more probable explanation for the "Belgian" buyer mystery.

Food for thought:

November 2013 - Ukraine crisis begins

Feb./March 2015 - Ukraine crisis ends, as does the port congestion

tmosley's picture

I would suggest this has something to do with the BRICS Bank, which always seemed like a way to "fence"/dump treasuries while not really allowing America to complain.  After all, it's not China, but the recipient/s of their loans, that is/are doing the liquidating, and for legitimate purposes like infrastructure development.

This is how the tide of decades of printed "liquidity" turns, and rolls back onto our shores, sweeping away all exportable assets and leaving nothing but worthless paper in its wake.

smukster's picture

Haha, right you are, though it's just a detail in the bigger picture.

johngaltfla's picture

Or was China simply rotating from 5-10-30 year shit into 30-60-90 day more liquid shit?

Butterflying's picture

My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do...

edotabin's picture

Great!  Now go buy Teasurys for China, Belgium and fuck-off-istan.

knukles's picture

Usually many foreign institutions simply deal directly with the Fed, having an account there cutting out the 3rd party dealer community.  In this case they could simply directly or indirectly (via a bank/broker, etc) open an account at or cause an account to be opened at Euro-clear with obligations held in a nominee name (best) so that it would be hard for the issuer (Treasury) or it's dealer (Fed) to find specific holdings of specific clients (like China) if they wanted to abscond/seize them, etc.  A level of anonymity and different legal jurisdiction involved.
To the end issuer (treasury) it's kinda like the buyer using cash instead of a credit card.  Stuff gets sold but to whom is another story.

Shit'll buff out

Winston Churchill's picture

Just like the Fedres making the PBOC  a PD,to hide China's true holdings, thats a big

war chest being asswmbled there out of reach of Uncle Scam.

Thats a nice looking USD you have there, shame if anything happened to it .....

knukles's picture

Yup!  Tee heeh heh
The old saying about "them" comes to mind (And I don't mean at all to sound racist, xenophobic, just is what it is.) is that they very craftily plan for a very long term time horizon

Seize Mars's picture


Good catch on that Garland thing.

smukster's picture

Winston C

Either that, or a desperate peace / stabilization effort.

Urban Redneck's picture

Given the demand for high quality (garbage) collateral it may be moar profitable to use a middle man now (since we are trapped in ZIRP bizarro world).

Lets Buy The Dip's picture

I think its not about treasuries, that is not what the smart money is doing. That is just a headfake. Those bastards, force you to make mistakes, why they do the opposite. That is how they play this game. 

Did anyone see CARL ICAHN today. 

Have a look at this guy CARL ICAHN, famous US BILLIONAIRE in the US, his calls on the market have been killer and ridiculously accurate. See here. ==>

I have seen so many BEARISH calls on APPLE lately, and yet we keep marching up HIGHER and HIGHER and HIGHER on the AAPL, chart its not funny!!!

**scratching head** anyone realise the more those wanktards on tv, keep telling us how high the market is, the higher we go. Its like they get paid to lie, to get you short, and then that makes the next leg up higher, as SHORTS are forced to exit and cover their positions. Crazy effin stuff!

farmboy's picture

You are right. Apple is a proxy for the whoie stockmarket to get this thing further and further until it doesn't

I highly respect mr Icahn but refuse to play because in essence Apple is tech and will be one day exhausted no new screen will prevent that.

Then margins must go lower because sales stall IMHO the Apple watch is an act of desperation already. Secret discounts in the Iphone are there as shops offer the old models also new.

WillyGroper's picture


Why then are they financing the Agenda 21 apartments/shopping/chinese electric bus public transport  in Anaheim?

TeethVillage88s's picture

($31 Trillion in Foreign Property in USA vs $24 Trillion).

Last Data below is from January 2015.

Belgium 2002 = $10.8 B, then 2013 = $163 B, Today $354 B
Bermuda 2002 = $14 B, then 2013 = $94 B, Today ??
Cayman Islands 2002 = $10.7 B, then 2013 = $66 B, Today ??
Canada 2002 = $8.4 B, then 2013 = $46.6 B, Today $70 B
China 2002 = $95 B, then 2013 = $1,272 B, Today $1239 B
France 2002 = $11 B, then 2013 = $42.4 B, Today $75 B
Germany 2002 = $38 B, then 2013 = $54 B, Today $69 B
Hong Kong 2002 = $37 B, then 2013 = $89 B, Today $172 B
India 2002 = $5.2 B, then 2013 = $56.6 B, Today $91 B
Ireland 2002 = $6 B, then 2013 = $91 B, Today $137 B
Japan 2002 = $260 B, then 2013 = $1,023 B, Today $1238 B
Luxemburg 2002 = $20.2 B, then 2013 = $107 B, Today $176 B
Mexico 2002 = $16.7 B, then 2013 = $52.7 B, Today $85 B
Norway 2002 = $5 B, then 2013 = $74 B, Today $73 B
Philippines 2002 = $3 B, then 2013 = $36 B, Today $40 B
Poland 2002 = $7 B, then 2013 = $31 B, Today $29 B
Russia 2002 = $3 B, then 2013 = $138 B, Today $82 B
Singapore 2002 = 19.4 B, then 2013 = $82 B, Today $109 B
Switzerland 2002 = $28 B, then 2013 = $157 B, Today $205 B
Taiwan 2002 = $0 B, then 2013 = $183 B, Today $170 B
Turkey 2002 = $2 B, then 2013 = $18 B, Today $82 B
United Kingdom = $45.7 B, then 2013 = $130.6 B, Today $207 B

Here is another big bubble, jumped 8% in Financial Crisis as the USA Surrendered Sovereignty:

Federal Debt Held by Foreign & International Investors as Percent of Gross Domestic Product, 2014:Q4: 34.75940 Percent of GDP,

Current Account Balance: Total Trade of Goods for the United States©, 2013: -703,911,000,000 US Dollars,
Sum Over Component Sub-periods (2013 was last data),

By this chart we are still in Credit Bubble Territory.

Bank Private Credit to GDP for United States
2011: 55.47615 Percent, (Credit to GDP)

But this one looks worse (Delinked to Deposits? Bubble 1996, 1998, 1999):

Private Credit by Deposit Money Banks and Other Financial Institutions to GDP for United States, 2011: 189.51640 Percent, DDDI12USA156NWDB,

Beam Me Up Scotty's picture

Sounds like money laundering. Isn't that illegal??

seek's picture

Only in small amounts.Laundering 10K gets you prison, but once you're laundering over a billion you just pay a small fine, and when it's over $50 billion it's completely legal.

knukles's picture

Or, any amount in cash to a politician.  All legal and tax free for the pol, to boot!

Bastiat's picture

If you are a sovereign state, nothing is illegal -- unless you lose a war, then the winner defines what was illegal.

sessinpo's picture

Beam Me Up Scotty    Sounds like money laundering. Isn't that illegal??


No. They own the money thus they are not laundering it. You and I don't own the money, thus it would be illegal.

See the difference?

Magnum's picture

The amount of interest that we all pay for the profligate spending by Washington is the real story.  Remind me how much of the budget is squandered on interest payments every year...

Ham-bone's picture

Regarding interest payments on the national debt, the US barely pays more now than it did in mid 1990's in total dollars and a collapsing % of the budget...

check 2nd chart in the link for net payments...

check 2nd chart in link for net interest payments...

Now the buyer(s?) of all that debt at record low yields is a different question...

seek's picture

I always love ZH originated content, and this is no exception.

Consuelo's picture

Gold.    Which nation has it and how much.    Isn't that fairly well the terminus? 

SmedleyButlersGhost's picture

Nice article - I actually understood the graphs. That certainly merits a beer

khakuda's picture

Outstanding work again folks.

Squid Viscous's picture

filed in the "weak sauce TD" category...  

Lumberjack's picture

I wonder who is the allly the US has that deals in chocolate and diamonds, yet quietly has been doing huge business with China very quietly over the last decade.

Lazarus Taxon's picture

I am a little heavy with unhedged TLT.

Hoping PBOC will help a honky out.

I promise to buy at least one cheap trinket if y'all do.

knukles's picture

Dat be 2 of us, bro. 
I'm still with the global economy sucks and there's a surplus of everything.

knukles's picture

+ a bazillion from Snowy!

Fun Facts's picture

ointment on the fly

Illya Kuryakin's picture

So they're not dumping them after all then.

GRDguy's picture

The Chinese are owned by The Great Red Dragon, based in London, where the rules of financial conduct are looser than anywhere else in the world.  For what they do, agents within the City of London Corporation would be arrested anywhere else in the world.  The "Snakes In Suits" are simply moving money around to make it harder to expose them. Like rats and roaches, they love dark places like "dark money" and "dark pools." What I can't figure out is why non-sociopaths do business with them. Perhaps it's as simple as not understanding the word "sociopath."  It's not as if it's written on their foreheads.

WTFUD's picture

If you count .Gov as one big Orchestrated Fiddle and each country dependent on GDP size has say 10-200 Oligarchs who combined control every Government.

Fights break out but Oligarch ( or Group of ) in country X own let's say 10% of Country Y's Piggy Bank with country Y's Oligarchs owning 15% of Country Z Piggy Bank and so on and on as these 1000 Oligarch own 70% of the Worlds GDP.

Oligarchs Ukraine Utd are hemorrhaging Power and because Oligarch ( Franklin or Another Company say HUNTER BILE Ltd) wish to protect their Investment of a 25% stake in Ukraine join forces with Oligarch Poland who have a 16% stake in Ukraine Utd BUT Oligarch Germany has a 12% stake in Russia & Friends crushing Ukraine Utd.

When opposing or even Undecided Oligarchs sense blood say US Policy shift to Iran and the Flood of US/Other Business into that country , allegiances swing accordingly.

I'd say with Hoss Kerry and now Nuland on her way to Moscow the circle-jerk turns in Putin's favour and in/directly to China.

Whatever, WE prawns ( i mean pawns ) will scramble for the scraps left over by ALL OF THE ABOVE.

Place sanctions on a country and prior to just lifting them send in the cavalry to snap up the deals before new KIDS on the block get entry.

All this he said she said shit show to slow cook joe public , who can barely remember his name through all the confusion.

The Cabal of Oligarchs are border- less. Patriotism is for Uncle Dumb Dick, opium for the masses.

Once the realization that USSA & Europe have lost their Mojo, Goldman and the Team are now representing the Interests of New Forward Looking Cold Climate Change Flotilla chasing the next decades Front runners leaving USSA up shit creek.