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It's Official: China Confirms It Has Begun Liquidating Treasuries, Warns Washington
On Tuesday evening, we asked what would happen if emerging markets joined China in dumping US Treasurys. For months we’ve documented the PBoC’s liquidation of its vast stack of US paper. Back in July for instance, we noted that China had dumped a record $143 billion in US Treasurys in three months via Belgium, leaving Goldman speechless for once.
We followed all of this up this week by noting that thanks to the new FX regime (which, in theory anyway, should have required less intervention), China has likely sold somewhere on the order of $100 billion in US Treasurys in the past two weeks alone in open FX ops to steady the yuan. Put simply, as part of China's devaluation and subsequent attempts to contain said devaluation, China has been purging an epic amount of Treasurys.
But even as the cat was out of the bag for Zero Hedge readers and even as, to mix colorful escape metaphors, the genie has been out of the bottle since mid-August for China which, thanks to a steadfast refusal to just float the yuan and be done with it, will have to continue selling USTs by the hundreds of billions, the world at large was slow to wake up to what China’s FX interventions actually implied until Wednesday when two things happened: i) Bloomberg, citing fixed income desks in New York, noted "substantial selling pressure" in long-term USTs emanating from somebody in the "Far East", and ii) Bill Gross asked, in a tweet, if China was selling Treasurys.
Sure enough, on Thursday we got confirmation of what we’ve been detailing exhaustively for months. Here’s Bloomberg:
China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.
Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.
The latest available Treasury data and estimates by strategists suggest that China controls $1.48 trillion of U.S. government debt, according to data compiled by Bloomberg. That includes about $200 billion held through Belgium, which Nomura Holdings Inc. says is home to Chinese custodial accounts.
The PBOC has sold at least $106 billion of reserve assets in the last two weeks, including Treasuries, according to an estimate from Societe Generale SA. The figure was based on the bank’s calculation of how much liquidity will be added to China’s financial system through Tuesday’s reduction of interest rates and lenders’ reserve-requirement ratios. The assumption is that the central bank aims to replenish the funds it drained when it bought yuan to stabilize the currency.
Now that what has been glaringly obvious for at least six months has been given the official mainstream stamp of fact-based approval, the all-clear has been given for rampant speculation on what exactly this means for US monetary policy. Here’s Bloomberg again:
China selling Treasuries is “not a surprise, but possibly something which people haven’t fully priced in,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP. “It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind.”
“By selling Treasuries to defend the renminbi, they’re preventing Treasury yields from going lower despite the fact that we’ve seen a sharp drop in the stock market,” David Woo, head of global rates and currencies research at Bank of America Corp., said on Bloomberg Television on Wednesday. “China has a direct impact on global markets through U.S. rates.”
As we discussed on Wednesday evening, we do, thanks to a review of the extant academic literature undertaken by Citi, have an idea of what foreign FX reserve liquidation means for USTs. "Suppose EM and developing countries, which hold $5491 bn in reserves, reduce holdings by 10% over one year - this amounts to 3.07% of US GDP and means 10yr Treasury yields rates rise by a mammoth 108bp ," Citi said, in a note dated earlier this week.
In other words, for every $500 billion in liquidated Chinese FX reserves, there's an attendant 108bps worth of upward pressure on the 10Y. Bear in mind here that thanks to the threat of a looming Fed rate hike and a litany of other factors including plunging commodity prices and idiosyncratic political risks, EM currencies are in free fall which means that it's not just China that's in the process of liquidating USD assets.
The clear takeaway is that there's a substantial amount of upward pressure building for UST yields and that is a decisively undesirable situation for the Fed to find itself in going into September. On Wednesday we summed the situation up as follows: "one of the catalysts for the EM outflows is the looming Fed hike which, when taken together with the above, means that if the FOMC raises rates, they will almost surely accelerate the pressure on EM, triggering further FX reserve drawdowns (i.e. UST dumping), resulting in substantial upward pressure on yields and prompting an immediate policy reversal and perhaps even QE4."
Well now that China's UST liquidation frenzy has reached a pace where it could no longer be swept under the rug and/or played down as inconsequential, and now that Bill Dudley has officially opened the door for "additional quantitative easing", it would appear that the only way to prevent China and EM UST liquidation from, as Citi puts it, "choking off the US housing market," and exerting a kind of forced tightening via the UST transmission channel, will be for the FOMC to usher in QE4.
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But why don't the Chinese just print yuan?
One unamed.official said they were speaking to qualified authorities who said they hated the dutch. But they bought $100 billion anways.
This makes since. Engineer a bubble, make it crash, then "claim" you need to sell $USD to save yourself.
Banisters are soooooo brilliant.
Today will be very interesting; it looks like the market is going to rise by 75-150 points at the starting gate; the first 2 minutes, then it looks "ify" from there and I believe the PPT is on full stand-by. The futures were advancing and declined closer to the lows than the highs, this may signal the jump followed by the slump, which is why the Plunge Protection Team needs to be on stand-by. At the end of the day I believe we end fairly flat, or really down, or really up (sarc)...then its Friday.
Who CARES!?!? This kind of drivel is useless. The treasuries are entries in a computer someplace. Who "owns" them makes absolutely no difference. Let the Chinese government take the computer and dump it into teh ocean. Either the Chinese buy, or the Fed buys, it makes ZERO difference. Why bother writing this stuff. Zero hedge can do better.
Actually it makes a big difference.
When a product is no longer of interest to consumers (any consumer) it looses value.
As anyone on ZH knows the FED purchases become even less significant when no one wants to purchase. If others follow suit we will have trillion dollar bills in our wallet in no time.
That is why the markets will continue on the downside; the FED is allowing the slow and steady burn to scare people into the "safe haven" and therefore creating buyers of UST, but this works for a very short time and will cause a panic and they probably know it and don't give a smack; they are not affected by all of this. Not till they die, then they receive the permanent slow burn as will many others.
No. You're only looking at a tiny piece of the whole puzzle. The Fed creates way too much new money every year. EVERY year. They do this by "buying" useless paper, and exchanging that for dollars they create from nothing. Whoever buys the useless paper is irrelevant. They also create even too much money to fund the US-China, US-Opec, and US-Euroe,and US trade deficit. So lets go through the scenario: The fed TODAY is the single largest purchaser of US government debt. By far. They auction some of the treasuries off, and hold what they can't sell.
Huge amounts of US Dollar credit pile up in central banks all over teh world due to the horrific trade deficit. Foreign governments take some of those dollars, and buy treasuries. If THEY don't buy the treasuries, then the Fed will. its a zero sum game.
No matter what entity purchases teh treasuries, and They always end up someplace, the expansion of the monetary system has followed teh EXACT same curve since about 1970. It's shape is the exponential growth compound interest curve.
Whatever, whoever buys the treasuries is irrelevant, they STILL get created and way too much new money STILL gets pumed into the banking system. Whoever cooked up this crap that if the chinese government stopped buying new US government debt that the world would end for Americans is obfuscating the issue. Its not WHO is buying the treasuries, it is how much of this new useless paper gets created every year.
redd_green - you need less_yellow.
If you think that nothing is real.... and it is all just a computer entry..... come back and repost after the Chinese tell President Trump to fuck off on the new US / China trade terms. When the Chinese adopt a gold backed currency ...watch the prices of commodities in terms of USD.
You can do better by STFU .... and learn a bit before you absorb valuable screen space here at ZH.
The Chinese never honor their trade agreements.
The Russians never honor their trade agreements.
The Saudis never honor their trade agreements.
The Israelis never honor their trade agreements.
The Indians never honor their trade agreements.
The Mexicans never honor their trade agreements.
Only the US honors their trade agreements.
Why should any of these liars have favored nation status?
I paid for this, with my life. My kids are paying for this. Your kids are paying for this. With their lives.
They are killing US. Kill them back.
Fuck them. Fuck bureaucratic trade agreements. Fuck bureaucrats. Fuck academia. Fuck the MSM.
Feel better? Good.
"When the Chinese adopt a gold backed currency ...watch the prices of commodities in terms of USD."
Then watch the US response with Emperor Trump in charge - send in the Legions!
"My greatest flaw. I am surrounded by idiots."
-Victo von Doom
Sorry Clowns you missed that one by a mile. Ten miles. Its all very real. The issue: No matter who purchases the treasuries, they all, every one, STILL get issued. All unpurchsed new treasuries end in ithe Feds holdings. The Fed has been the single largest "purchaser" of US debt for quite a few years, maybe 10 now.
Its not who purchases treasuries, it is how many new treasuries that get created that is the issue. Either way, the US government issues more debt every year, than the year before, since 1970. And they create more new money every year than the year before.
The shape of the curve of the growth of US government debt, and the growth of the money supply has been the same since about 1970. Care to take a stab at what happened in 1970?
Now getting back to your point (or what you THINK is a point): The price of treasuries doesn't make a difference. They could go to zero and the Fed would STILL create billions of new US Dollar credit, pump that into the banking system, and the treasuries up for auction. If some government bought them all for zero, doesn't make a difference. The credit expansion behind the ridiculous "elastic monetary system" is what is the problem.
Lie #1: "
China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan"
China is de-valuing the yuan, which means they are printing MORE Yuan, not less. They are not buying USD. They are selling Yuan, created from nothing.
They are selling UST and buying Gold. Same time selling yuan, all over the place
And what are the gold sellers buying?
Governments.
"He who has the gold, makes the rules."
"My greatest flaw. I surround myself with idiots."
- Victor von Doom
Selling yuan? Who is buying?
It's difficult to understand how the US Dollar can be advancing.
Hot money
When your standing in a cesspool up to your neck, even a shit covered rock is appealing.
Since USD not really moved, on that, one can easily guess thy bought Gold for their UST instead of selling USD.
Bought gold from whom?
The Saudis have been selling as well to prop up their economy.
"...according to people familiar with the matter."
The latest available Treasury data and estimates by strategists suggest that China controls $1.48 trillion of U.S. government debt, according to data compiled by Bloomberg.
Seven times the $200B+ they have sold this year. Who's going to buy them? What discount will they sell for in the buyer's market this will create? What will they buy with the dollars they obtain? If they buy their yuan back, we have a double whammy. The demand for yuan increases while the demand for dollars decreases (and values adjust accordingly).
Lots of dynamics here.
What the world needs right now is someone who has a clue about the proper process for managing any Medium of Exchange. The world will never likely get this because it would drive all this manipulation out of Dodge ... and that is not good for the international bankers' farming operation known as the business cycle.
When the Japanese were in this catbird's seat years ago, they bought downtown Dallas.
Who are they going to buy their Yuan back from and with what?
Who are they going to buy their Yuan back from and with what?
Logic would tell me they will buy back the yuan from whoever has them and wants dollars. They will buy them with the dollars they are getting from selling their USA treasuries.
I groped around a little to see who holds yuan. Didn't find anything. Seems logical the Chinese people and businesses themselves would hold most of the yuan. China mostly sells stuff ... they don't buy much stuff. Presumably what they do import is raw materials they don't supply themselves. It would seem logical they pay for those imports in dollars ... for now.
But they're not selling as much stuff as they used to so they're probably buying less as well.
It's a pretty big mess out there.
I love how this somehow fits into your narrative of gold without any rational reasoning.
....
In 1964 GHWB said that if China enters the UN the US must leave. Chinese economic warfare has been absolutely direct since they got into the WTO.
It Is On. Kill the Universal Nazis and the Fucking Rejects before they kill you.
By the time GHWB met Mao in 73 he had been turned, by the most vile Israeli Nazi Hank Kissinger, who had to flee the USA to Malta to escape Nuremburg for Korea. Vietnam. Cambodia. Laos. Bangldesh. Pakistan. East Timor. Hungary. Palestine. America.
There is no statute of limitations for war crimes and crimes against humanity. This includes aiding and abeiting after the fact.
except that the US has not signed it, the international court of hague membershp, and no american citizen will ever be led before the tribunal as long as Pax Americana runs the world, the UN and WTO etc.etc.etc.
As for Bush being "turned" thats like saying a budding politician doesn't know who "butters" his bread. In 1973/74 it was Nixon/Kissinger in the GOP.
Spot on, Mo. And its even worrse: very,. very large powers within the USA sped the whole thing up. Like the Waltons who forced Walmart suppliers to shut US factories and buy from Chinese and Mexican contract manufacturers, and Romneys whos hedge fund bought up US companies, fired Americans and shipped the jobs overseas They all made deals with the devils and made billions for themselves.
Why not liquidate .... the dollah is strong .... commodities are cheap .... buy a few million barrels of oil .... mucho cobre (much copper) ?
...selling TSYs to 'support' the yuan from a 'shock' devaluation??? they devalued on purpose...which means they should be buying TSYs.
something doesnt add up, or would someone please enlighten me.
Taking money home to flood their economy in effort to prop it up.
Choice is to sell T's or print
Selling $208 billio...
Well SELLING implies a BUYER
Who the hell is going to buy $208 billion treasuries ? Russia ?
Me ?
Quite possibly you, if you are a US taxpayer...
The PPT is going to be busy propping up the simultaneously bursting bubbles in stocks and bonds.
"Who the hell is going to buy $208 billion treasuries ? Russia ?"
The Federal Reseve.
+1 for asking the important question
the fed through with printed money through some covert channel (that mysterious buyer in Belgium)
I think it's the Fed. Anytime a seller approaches the Federal Reserve, the Federal Reserve has to buy the bonds. Otherwise, it is an immediate default by the US.
I'm just glad that deficits don't matter.
"I'm just glad that deficits don't matter."
Except that they lead to the oppositon hoarding vast sums of gold, which leads to political challenge for global hegemony, and then global war.
Other than that, of course.
"My greatest flaw. I surround myself with idiots."
- Victor von Doom
Selling USTs means China receives USDs.
No difference for them.
Issue is: What do they do with USDs?
Same thing I do with my USD...
Keep stackin'..!!
Tick tock, tick tock...
That's right, they should back up the rickshaw and pounce on physical PMs while they're still cheap.
Not just PMs. Like all good preppers it'll be food, water supply, fuels, PMs (of course), lead & lead dispensers. Make no mistake, the Chinks know they are headed towards a war , same as we do.
"My greatest flaw. I surround myself with idiots."
- Victor von Doom
Not necessarily, depends on the counter-party.
Their actions are very prudent.
"Issue is: What do they do with USDs?"
Buy hard assets.
hold them and wait for the year of the pig.
GREAT NEWS !!!!!!!
I hope ALL the big holders of treasuries sell them and if the long-term interest rate go above 5% again, then I will be all in.
If 5% were to happen anywhere near the broadside of a barn within 5 years from now, you'd be 'all in' alright...
Bill Gross must be short UST.
I know he reads Zerohedge, so he absolutely knew months ago that China was quietly dumping through Belgium.
So, why the sudden vocalization...?
Bill, if you are reading this...that's very unpatriotic of you. I want you to go home tonight, raise the flag, and sing 10 star-spangled banners and think long and hard about your behavior.
Bill Gross is long RE when he should be long MIC. Buffet too. These guys are pikers. Take a look who's long MIC. THEY claim THEY own *all* the RE. Everybody pays taxes to THEM...
Liquidating US Treasuries? DAS RAYCISS!
The state of Colorado has issued a counter-statement and will begin airdrops of high-quality cannabis so the Chinese can just chill the fuck out.
China is already produces 79% of the worlds hemp. https://en.wikipedia.org/wiki/Hemp
they call it da ma - translates roughly as "the great mother"
Now if only they figgured out how much more money they could make if they pulled up all the male plants.
Cops and disruptive assholes will grow sperm regardless. The stuff is ubiquitous.
I just think the Chinese will really benefit from our great strains. I'm going to say indica.
I wonder when they will start to sell their gold. Gold to $700
Looks like bond holders are getting their long overdue haircut.
Was going to ask why China doesn't just print all the yuan they want, didn't China invent the printing press a few years ago, but I think "not a yahoo" put his finger on it - capital flight, they want the cash to buy real estate, US stocks, politicians, whatever.
http://www.zerohedge.com/news/2015-08-27/its-official-china-confirms-it-has-begun-liquidating-treasuries-warns-washington#comment-6476894
In other words, Thr Federal Reserve will buy all Tresury comers.
Sounds like hyperinflation is coming to town.
GDP of Washington DC is 105 billion. China sells $100 billion USD in treasuries. ahhh discount xie xie.
Kudos, you guys called it!
Doesn't there need to be a buyer? If I list my vinyl record on ebay I don't get the money til someone buys it. Who is buying what China is selling?
Obama? He will leave office having more than doubled Busn's 10 trillion tab. Will it hit 20 trillion under Superfly's watch?
"Belgium" is always buying...
Not sure why it is called the Federal Reserve...a more appropriate name would be Federal Checkbook Assistance Plan. Think of the Treasury department as an entity which needs some assistance..you know some welfare money to help them during a rough patch...So our Federal Checkbook friends help out by printing more money...I mean what are friends for...Remember "seek and ye shall find"...well the Treasury department is in the seeking mode...
China warning the FED, not DC.
Under normal conditions, the FED would lower rates because of inflationary concerns.
But it cannot use that trick anymore.
So, expect the US to make demands on its allies to support the USD$.
But these allies are weak and cannot support without causing civil unrest in their own countries.
The only card the US has is force.
We will witness the US become an open dictatorship and all its people and allies will condemn it.
Sovereign debt blues.
.
"We will witness the US become an open dictatorship and all its people and allies will applaud it."
Fixed it for you.
The rabbit hole will go deeper than you believe.
"My greatest flaw. I surround myself with idiots."
- Victor von Doom
good luck vickey
China warns treasuries holders, liquidates Washington ?
No, read it wrong.
that explanation does not make sense. they are devaluing their currency so they are selling ust to defend the currency? i mean what. the. fuck.
The Chinese want the US to devalue itself out of existence.
The Chinese want more US QE.
The Chinese want to buy US assets for pennies on the Yuan.
The Chinese don't want the risk of holding worthless paper.
This war has been raging silently, but not for long.
The Chinese are pumping oil in Iran and selling it for Yuan.
And the Iranians aren't screaming death to China.
No Problem, The Fed will just tuck them into the secret bit bucket annnnd... there gone!
China is working in collusion with the fed proliferating dollars globally, last time I checked they had a $50B a month trade surplus-including US RE buys.
China also has surplus from all their exporting partners around the global, particularly in Africa.
Any Yuan deal is really a bearded dollar deal.
the TPP is a buy off of the Obama regime preventing tariffs forever.
America will be sealed in a tax and currency trap like Greece voted in by our own traitor reps.
China doesn't like US recklessness.
China looks at the US as a psychotic child.
Here's an alternative scenario. China continues to attempt to manage it's currency, continues
burning through reserves, then does an SNB - it throws in the towel and allows the Yuan to fall
by 10%-20%, a devalution referenced in one of Tyler's posts a couple of days ago.
If the Chinese were to do this they could say to the world, "Well, we tried to hold the Yuan
at [whatever rate] but the market overwhelmed us." It's not as if central bank currency
interventions have a good track record of being successful long term.
If this scenario were to unfold and you were a cynical person, you could say the 10%-20%
devaluation was what China wanted all along but was unwilling to just come out and do because
the US, EU, Japan, etc., would go batshit crazy if they did.
Ultimately, China doesn't need the IMF to issue a gold backed currency.
The IMF needs China to stop that action.
Gauntlet in the face.
It's the beginning of the endgame.
Two issues are (1) why is China selling it's stock of UST's and why now, and (2) if China is selling it's UST's, someone has to be buying those UST's and who is that buyer?
For America it's room to manoeuvre is becoming more and more restricted.
Oh my, did CNBC's Kayla Tausche just admit on-air that she is not an iWatch user? DAS RAYCISS and unpatriotic...it's downright blasphemous! I sure hope she still has a job tomorrow.
I heard that you can order pizza on your iwatch.
LOLOLOL
Here in the Uk they're giving iwatches away free with used cars.
Here we get used iWatches with a new car...
Well worth the $800 for one.... (cough)
The US continues to have the tastiest shit-sandwich of all the world's shit-sandwiches, but for how long?
I don't totally get this... The Chinese deliberately engineer a devaluation, then we're expected to believe they're liquidating gargantuan amounts of their UST's to support the currency, even though the PBOC has been unloading UST's for months via Belgium....
Something else is going on, but yes the mass sale of UST's will have a major effect on the US economy.
Usually forced firesales give a bad price for the seller. China is getting a less desirable price for the treasuries than a slower sale rate if they had for time. They must be under a lot of internal pressure.
Perfect excuse for the FED to ramp up QE4. They may raise rates too.
Yeah....word is China didn't want to screw up their military parade next week....LOL
http://www.bloomberg.com/news/articles/2015-08-27/china-said-to-interven...
Just a bit OT:
Israeli fighter jet taken out over Syria by s-300:
http://www.globalresearch.ca/syria-shoots-down-israeli-warplane-f-16-bom...
boy would i like to be a member of congress asking planet janet if she is the mystery belgium buyer, and has anyone seen the feds balance sheet lately? once before the treasury printed up a trillion in cash on the threat of China repatriating this paper. now we have a much more serpentive and devious way of getting it done but turning in bonds for cash is purely inflationary, YET as we stare into the deflationary abyss, (a small peek last week in the stock market) , you really have to wonder, if we devalue all this (socalled) good Treasury paper, how does that help stop deflation?,
Oh no Mr. treasury bill!
Zion is a scheme, not an ethnicity..
So, what was the status on the debt ceiling again?
http://atimes.com/2015/08/zero-hedges-take-on-chinas-rrr-cut/
8/26/15 @ tD/zH via Asia unhedge
Sigh...with all of the stories here and elsewhere over the years about the Chinese "dumping" US Treasuries, you'd think they wouldn't have any left by now. Funny how they have so much after all that "dumping".
The Fed raises rates and destroys the Chinese?
What about the middle class?
Do we need it anymore?
WOW you have a middle class, all we got is rich or broke.
QE 4 is now an absolute Lock. There is NO EXIT from QE, no matter when the Fed attempts exit, even the rumor will tank markets.
Central Banks across the world are now totally committed to High Stock Valuations on a permanent basis, meaning corrections will be washed away in a sea of new money liquidity.
QE is permanent, as permanent as Central Bank's direct market internventions. Central Banks can not and do not invisage a world where equity share prices correct or reflect real economies. Wealth Effect is Central Bank "Iron Rice Bowl" policy.
It is a new form of Communism, for the 1%.
no shit, really.
did that just pop into your head.
Lol. that's pretty funny but Jack's opinion isn't usually far off the mark.
Jack is insightful.
A day late, but insightful.
No - it is only a stopgap until after the war, and the introduciton of the NWO "New Deal"
"My greatest flaw. I surround myself with idiots."
- Victor von Doom
QE is going on right now. It certainly was at work yesterday and today.
The Fed will only announce QE4 when the Nervous Nellies on Wall Street have to actually hear the words stumble out of Yellen's mouth.
Nobody gets this. There are no rules and regulations for the Fed.
The present FOMC can amend anything in the Federal Reserve Act.
Superpower Status seems Linked to Strong Stock Prices.
Just as I have said:
We are an Economic, Finance, Political, Military, and Corporate Superpower with the World Reserve Currency.
I agree. The FED like the Stock Markets, TBTF Banks, and Congress are Self-Regulatory Organizations (SROs).
US President also is largely an SRO, that is how he took the War Powers from Congress, and constitutional rights from the US Citizens.
first came the devaluation of paper currencies in China...then comes retaliation from other Asian nations...then comes China using the turmoil as the excuse to dump US treasuries and then use the dollars to scoop up more gold if any that remains in the west...
China is using toxic US bonds to recycle back to western banks so that they get more physical gold...when its gone then they repeg the Yuan to gold at a much higher rate blaming paper currency devaluation for the instability....
Then comes the entire middle east which opens up trade settlement notes backed by gold to settle oil purchases....
Meanwhile everyone dumps treasuries because they are sick of this toxic crap that allows the US to bomb the rest of the world thinking they are exceptional...what, Im not sure but more along the lines of psychopaths....
@ Mewa -
I'm tracking. However ultimately your getting at king dollar as the WRC...Gold is great if the dollar is dethroned, otherwise it just takes up floor space. Gaddifi already tried to trade oil for gold and wound up with a shank in his ass. Coupled with the SA / Qatari / (US) gas pipline & the Arab Spring - fair warning has been issued to anyone else that wants to swim upstream. However, if the velocity on foreign treasury sales really begins to pick up it takes the ball out the FED's hands, and could be a tacit question from China (et al): Just exactly what does back the US Dollar, and given the gross violation of Bretton Woods – why is it still the WRC?
That said, if things turn hot China will need to rely in part on Russia - who is looking like a weak sister in Eastern Ukraine based on casualty payments (even though they aren't officially there).
[url]http://www.forbes.com/sites/paulroderickgregory/2015/08/25/kremlin-censo...[/url]
Short equity indexes now for a 3% down move
Then 2% up and then 30% dowwwwwn
I'm an equity and options trader not fx so can someone pls explain to me why selling Treasuries makes upward pressure on yield. Where I'm from when people sell it makes the instrument sold LESS expensive, not more...
"I'm an equity and options trader not fx so can someone pls explain to me why selling Treasuries makes upward pressure on yield. Where I'm from when people sell it makes the instrument sold LESS expensive, not more..."
Think effective yield. A bond with a 5% coupon, sold at $120/per (par is $100) has an effective yield of 4.17%.
That same bond sold at $80/per (par is $100) has an effective yield of 6.25%.
I think the are causing a global housing bubble, with trillions of USDs king dollar rules, bringing in all the banks at 70 to 100 then POP!!!!! Sell sell sell at 30-40% downgrades across the board........ Good bye banks, good bye economies, hello global recession and never seen before unemployment... but why? How much is Taiwan worth to the Chinese.. Its just a rock right lol lol lol!!!!!
Looks like the cleanest shirt theory will be tested in the Chinese laundry very soon….
Wonder what proxy the FED / PPT will use this time.
Catherine Austin Fitts/Greg Hunter
https://www.youtube.com/watch?v=K73gNKjFx0I
Planet Debt
Profitability of failure.
Enforced by force.
She's paid to be an optimist.
I'm not.
But...Do you read the bible?
I don't think Jesus has a portfolio.
But he has a good retirement plan.
I've been told that Jesus saves, but at which bank is a mystery.
We mere mortals don't get that insider info, but perhaps the Vatican knows.
I'm more worried about Full Faith and Credit.
I have one question: Since China understated the amount of gold currently in its reserves, is it possible that the country also understated the amount of U.S. Treasuries that it has sold?
The Chinese government doesn't like to show its hand. Doing so would run counter to Sun Tzu's Art of War.
Visualize a vice slowly being turned with you dick in it.
End game is to remove your dick, and make it hurt.
That was a good illustration why Economics is a dismal science. Having your junk squashed by relentless Chinese dumping of your worthless foolishiness is pretty much the most just ending of this Greek tragedy.
ROOK OUT BEROW GWAI-ROH!!!
This is starting to add up.EM's pulling out,oil backed economies in trouble so their not recycling dollars into the U.S. and Central Banks accumulating Gold instead of buying Treasuries.It must mean higher rates because of the size of the U.S. deficit.I remember that Obama was determined to run her up to $20 trillion before leaving office.Or maybe it's the poilitical-economic situation in America making others nervous?Get out while it's high I guess.But then againg if they do raise rates in September then demand will be back.
I don't know why country without oil are so smart ?
Peter Schiff has been warning about this for YEARS. Literally.... YEARS.
This isn't a problem China selling our Treasuries. The problem lies in when there are no buyers.
Only a financial advisor that is not retiring soon would tell you to stay in the stock market because it only took 5 years to recover the loss of the last recession.
Here are some more signs of a recession.
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record...
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/
http://www.zerohedge.com/news/2015-07-27/when-will-we-ever-learn/
Here is how to respond.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
To put this in a different context, this is the equivalent of a financial "nuclear war”. The US $ is the world’s premier fiat currency. China’s selling of massive quantities of US T bills will undermine the value of the dollar. End result- increased inflation and more economic headaches for the US. Bottom line- Economic problems for the US have only begun. To protect yourself consider buying Gold (or gold trusts via the stock market) and shorting the $ and Dow. This also begs the question, will the US/proxy state (read Japan) attack China?
If China dumps 1 trillion in treasuries, the fed can simply buy them all and sit on them. This will all be done off the books, of couse. The fed will hide this by showing various countries increased their holdings, although in reality they will be buried deep within a fed account somewhere. The US treasury dept can stop paying them back, which they probably stopped paying a long time ago. What is the fed going to do? If the US government were to default it takes the fed down with it. This circle jerk can go on forever.
"we asked what would happen if emerging markets joined China in dumping US Treasurys"
Tyler- How about asking "What would happen if emerging markets joined China in dumping Gold?"
Looks like the FED will end up owning more stocks tomorrow.
damn the torpedoes! full steam ahead!
The new owner of US Treasuries - Iran
Pay back is hell.
Hell : The core of earth is radioactive
which is surrounded by the great lake of lava
Final destination
Cabals capitalists & banksters strategy to loot the whole world using stock markets as a playthingies has backfired.
They have shot themselves in their own foot.
Hey caballahs its THE right time to convert all the dollah into paintings and vanish
.
.
only to appear in Israel
I was given the impression, through reading other sources that the Chinese are merely letting their debt mature.
I don't buy the fact China is selling bonds before maturity?????????????
I was under the impression the soveign wealth fund was just letting the UST mature.
There is a big difference. The Chinese are changing strategy and empowering a consumer based economy. They have no debt and they hold a lot of questionable UST debt.
China invested 1/2 of their FX surplus and rolled it into UST debt for 20 years foregoing the luxuries of the Western culture. China is a billion savers with no revolving debt. China has the largest GDP surpassing the USA this year.
Don't underestimate China. They can pivot on a dime and implement policies our Gov't would never have the balls or means to attempt.
Mao threw a million Chinese volunteers at MacArthur and kick him back to the 35th. Now they have 10 times that manpower and they aren't afraid to defend their position.
Conrad 'Connie' Brean: You watched the Gulf War, what do you see day after day? The one smart bomb falling down the chimney. The truth? I was in the building when we shot that shot - we shot in a studio, Falls Church, Virginia. One-tenth scale model of a building.
Stanley Motss: Is that true?
Conrad 'Connie' Brean: How the fuck do we know? You take my point?
Did you see this? http://www.cnbc.com/2015/08/27/shenzhen-goldman-sachs-is-chinas-latest-f... They're actually counterfeiting Goldman Sachs. China is awesomesauce!
Did you see this? http://www.cnbc.com/2015/08/27/shenzhen-goldman-sachs-is-chinas-latest-f... They're actually counterfeiting Goldman Sachs. China is awesomesauce!
Krispy Kreme Kike dont give a shit - print MOAR moolah
There's something I do not understand. Please explain to me:
First, China was devaluing its RMB currency. Now you are saying they'll be liquidating like crazy, to get USD, in order to convert this back to RMB (and then prop up their domestic markets). Meaning: that would put UPward pressure on the RMB , right?
First thought: I know the RMB is not traded freely, but upward pressure should nonetheless be expected from such large 100Bn moves (if you say it's large for the US market, it certainly is large to China). So why would PBOC do such a thing, seeking upward pressure on the RMB after devaluing first?
Second thought: suppose - there would be NO upward pressure onn the RMB from this - since the PBOC keeps the peg forcefully - then it simply means: many more RMB's for the same USD 100 Bn converted = simply QE (in RMB) by the PBOC.
Any comments welcome, I am trying to get my head around IF / WHY the PBOC could / would be taking actions contrary to the initial RMB devaluation.
Thanks
What really. REALLY pisses me off is that the people of the US were traumatized by 9-11 and lied to about weapons of mass destruction in Iraq, a war the would "pay for itself" and then the oil procured by destroying a nation and killing and maiming more or less innocent troops was turned over to China! And Iraq abandoned. What the bloody hell??? Afghanistan is obviously about drugs that probably finance the mercenaries and the oddball "enemies" used to "terrorize" us. Why haven't the American people taken Washington DC apart brick by brick, built execution plazas and rid ourselves of the vermin that got us into all these messes? WHY! Start over again, this time with term limits for starters. So now the so called govt. will buy back worthless dollars with worthless paper all the while honest veterans are sucking on pistols. Well NO!!! Now in another article I see "Update: China readies new bailout mechanism - pooling CNY2 Trillion of Pension funds for "investment" Are you going to watch that happen here?
And if you factor in the coincidence of the end of immunity for for American forces in Iraq (end of our involvement in Iraq) and the start of the trouble in Syria.
I see a very sick policy playing out and the US Gov't/MIC sinister involvement in wholesale slaughter for nothing.
China, together with their BRICS Union allies ( BRICS means Brazil, Russia, India, China, South Africa etc ...) are getting rid of their US dollar reserves, thinking that the currencies of their most indebted borrowers have less and less value, as in May 2015 China and the BRICS countries created the AIIB, FMI's rival bank, just after they had created China Development Bank, the World Bank's rival .
Last year China and their BRICS allied signed contracts in order to use their own currencies instead of the US dollar for their international trade transactions , because of the huge fines they had to pay to the USA for their transactions with some countries under American fluctuating sanctions ( Cuba, etc ...), even if they were on friendly terms with the US sanctioned countries, just because they had been using US dollars as an international currency for those transactions . Now, whatever sanctions, embargos or sanction cancellations the USA decide to impose on different countries, there is no impact on the trade of the other countries who decide to abandon the US dollar as the international currency and to use their own currencies.
Selling their US bonds and getting rid of their US dollars, they bought quite a lot of European , African, American places and firms such as the Waldorf Astoria Hotel in New York, towers of offices in Manhattan, in London, in Germany, quite a lot of banks and coveted areas ( inner airports etc ...) all over the world, and their investment funds are often the main shareholders of a lot of major firms abroad. Thus, we should be aware of the real significance of the depletion of their reserves in dollars . It is entirely voluntary.
I'd like to see the Chinese sell off at least 1/2 of their Treasury holdings over the coming months. They'd effectively be doing what the Fed should have been doing, which is raising interest rates.
So basically China and others could pull the rug from under the west by dumping bonds