Foreign Officials Sell A Record $48 Billion In U.S. Treasurys In December

Tyler Durden's picture

There has been much speculation whether foreign official institutions (central banks, SWFs, reserve managers and so on) are selling Treasurys or equities, or both as part of the Quantitative Tightening phenomenon.

Moments ago, courtesy of the latest TIC data we have an answer: based on the monthly flow report breaking down Treasury transactions between foreign official and private entities, in December the far more important, former, group sold $48.1 billion in US Treasurys: the highest single monthly outflow on record.

 

This was partially offset by a $12.2 billion purchase by Private buyers, however as the chart below shows, on an LTM basis, December saw a total of $20.3 billion in selling, and was the third consecutive month of net selling by foreigners. This was the first such occurrence in 15 years.

 

Finally, for all those curious what China is doing with its US Treasury holdings, using the TIC's stock data, we find that between China and its offshore trading proxy "Belgium", China dumped another $41 billion in TSYs, a move which continues to track the decline in its official reserve holdings almost TIC for TIC, pardon the pun.

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offwirenews's picture

Paging Exchange Stablization Fund...Your new shipment of Treasuries are here for you to soak up.

Soul Glow's picture

It's the biggest slush fund in the world.

philipat's picture

It's insane that it should be legal......if we are to have "markets"?

HowdyDoody's picture

So Belgium has placed a bulk order for toilet paper?

iggenFlot's picture
iggenFlot (not verified) Soul Glow Feb 16, 2016 10:37 PM

The American bond market is the deepest, most liquid the world over.  It's no wonder everyone flocks to us for our superlative debt.  They know we're good for it and we never default, so folks can sleep peacefully with the security it provides.

 

Superdave532's picture

Forgive my probably stupid question, but shouldn't record selling in treasuries, flooding the world with more than it would otherwise buy, raise the yield on them?  Why did yields on the 10 hit 1.5?

undertow1141's picture

You see, when the .gov buys its own bonds in secret, it doesn't help.

El Oregonian's picture

Hey, the band is still playing on the deck so everything must be ok, no?

undertow1141's picture

And I'm quietly packing my personal dingy........sure its fine........I'll ahhhhhh I'll talk to you later..........

FX223's picture
Let them keep cheering on the recovery that never was, blow hot air too infinity and spread their lies.  In the end, if it's bull shit or unicorn shit it all stinks the same. Keep stacking my friends.
philipat's picture

Fear not. To quote Ayn Rand "You can ignore reality but you cannot ignore the consequences of reality"

HardlyZero's picture

Someone (Larry Summers, Soros), entity, or country is trying to KILL (US$) BILL.

https://www.youtube.com/watch?v=TrZuYfti-pE

Sorry_about_Dresden's picture

The Feral Reserve uses/has used the Sauds, the PRC, Japan etc to churn the debt and use a shit load of REPO agreements to lighten their balance sheets on the day they report.

You have a valid question. I have been asking this question since the first QE. The Feral Reserve suppresses yields by buying UST from Primary Dealers then putting those UST on their balance sheet. Then when the day comes to report they sign REPO agreements w/ counterparties at the Bank of International Settlement using OUR gold reserves as collateral to take this debt off their balance sheet for a hot second while they publish the numbers. Then the debt goes back on their balance sheet.

Now the Sauds have been betraying Janet Felon by keeping the spigots fully open, driving spot prices down thus removing the cover and sucking liquidity that has hidden the Feral Reserves chicanery for so long. 

That is why the Sauds and the Turks have mobilized. This scares money into the UST market but, now people are paying attention! People are actually looking at their releases to see if the numbers jive.

Janet Felon, and her dark masters at the BIS, need an all out war to paw litter over their shitty balance sheet like a cat trying to coverhis  turds.

The internet has arrived! They can hide their crimes no more!

I saw Obama speaking at the G-20 and he is still sitting on the news of the Turks shelling the Kurds and trying to figure out how he is going to spin protecting ISIS (CIA) fighters from being annihilated by the Kurds. That is what this is all about. 

Is it to late for Vlad to claim he was born in the USA, produce a birth certificate, and run for the Republican nomination?

We just have to keep looking at the numbers. PRC UST holding reported by the State Administration of Foreign Exchange (SAFE), UST data, and Feral Reserve data. If oil prices continue to drop the Primary Dealers will get stuck holding the bag and they will try and exit. When the Primary Dealers bail, then rates will shoot up. 

http://www.federalreserve.gov/releases/h41/current/

Something has to give.

The Feral Reserve will use any means necessary, regardless of the collateral damage (civilian deaths), to preserve their.....thing.

No one can find a job so we spend all day looking for clues to catch these dirty bastards.

Will their next sacrifice of innocent lives be enough to keep us placated and chanting USA, USA!! How many will die this time so they can keep this PONZI going? How many must die so that Wall Street money lenders can maintain their privileges?

How is Obama going to spin NATO genocide of the KURDS? 

holdbuysell's picture

Asking the obvious, who bought the rest?

Soul Glow's picture

I think we're on to something here.

holdbuysell's picture

Fantastic series he put out.

I'm still on the fence on the cause of AIDS as he describes it, but certainly an interesting perspective deserving of consideration.

Soul Glow's picture

Yet Treasury yields go down.  There's that exchange stabilization fund again!

https://www.treasury.gov/resource-center/international/ESF/Pages/esf-ind...

nmewn's picture

Larry Summers snapped awake from his nap long enough to mumble something about abolishing Treasury notes over $100 face value to stop some as yet undetermined amount of criminal activity on someones part somewhere and then promptly fell back to sleep. - nmewn, apprentice ZH reporter.

//////

And expanding on this vein of paper ore everyone see's directly in front of them like the proverbial elephant in the room, why is it that Treasury bonds are conveniently left out of any discussion of abolishing "paper notes" due to "criminal activity"...hmmm? ;-)

Sorry_about_Dresden's picture

Next he will want to take Andrew Jackson off the $20!

Kaiser Sousa's picture

"and no matter what you do. please dont buy any Physical Gold or Silver. Thanks for your attention.

Sincerely,

Your loving MoneyChangers.

Buckaroo Banzai's picture

"...and don't forget to bring your hundred-dollar bills in for redemption! They will be cheerfully exchanged for fives, tens, or twenties-- your choice!!"

Soul Glow's picture

Or even better, put it in your bank account, in your very safe bank account.

undertow1141's picture

Coming soon to a bank near you, 1.5% deposit fee and 2% monthly balance maintenance fee.

All accounts under $500,000 will be charged a small account standardization fee of another .5%.

cowdiddly's picture

TIP of the fucking iceberg on the scale of this massive fraud and the whole world knows it especially anyone with a bloomberg terminal. One freaking trillion dollars of global reserves vanish in thin air without a trace. From my friend Hugo Salinas Prices website.

And since about 70 percent of the worlds reserves are supposedly held in US dollars or more precisely bonds. How did the price of these bonds decline to todays 1.75ish% with such a massive supply of paper being dumped? This should cause just the opposite,

 

http://www.plata.com.mx/mplata/articulos/articles.asp

12/January/2016

One Trillion Dollars' Worth of Bonds Magically Turn into Cash

Hugo Salinas Price

Bloomberg is back and presents updated data on International Reserves held by Central Banks, excluding gold, as of Friday, January 8, 2016, after a hiatus on this information since December 11, 2015 (for reasons unexplained).

The data for Friday, January 8, 2016 are shocking, as expected: Total International Reserves held by Central Banks, excluding gold, expressed in US dollars, amount to $11.032 Trillion dollars as of that date.

The decrease in Reserves thus amounts to precisely $1 Trillion dollars, as of January 8, 2016. This gigantic fall, of 8.31% of the maximum amount of Reserves - $12.032 Trillion dollars recorded on August 1, 2014 - took place over the course of only 17 months, whereas the growth of Reserves to its maximum figure took some 70 years, roughly since the end of WW II.

The fall in International Reserves is a clear indicator of a world-wide economic slump, which will become a severe depression.

It would be much easier to stop the flow of water over Niagara Falls, than to halt the contraction in International Reserves.

World liquidation has set in. The Piper must be paid. Growth is gone. This will be story in this epic year 2016.

There is a One Trillion Dollar Question: What entity or entities have purchased - for cash - the $1 Trillion dollars worth of Government Bonds that the central banks of the world have sold off in the course of the past 17 months?

What discount on the value of the Bonds did the purchaser or purchasers of the Bonds apply? If there was no discount, why so?

$1 Trillion dollars' worth of Government Bonds has disappeared from the books of the world's central bankers, sold by them for cash. WHO DID THE BUYING? On what Balance Sheets do the acquired $1 Trillion dollars of Bonds now rest?

Are the parties to these gigantic transactions to remain unknown? And what happens to the world's confidence in its financial system, when $1 Trillion dollars' worth of Bonds, and counting, just magically turn into cash?

 

<<Previous Article All the Articles Next Article>>

 

blue51's picture

Probably the same place the next few Trillion are going to go.Rob Kirby get droned yet?

sgorem's picture

i'm taking the FIFTH on this article, anyone else wanna a shot?

 

lester1's picture

Who the hell is buying the treasuries ???????

HardlyZero's picture

Denmark ?  Germany ?  Retirement accounts, State Pensions,...all before NIRP is realized.

Sam Spade's picture

ZH is usually on top of this, but this particular post does not make sense.  Foreign official holdings of Treasurys dropped by only $22 billion (from $4.117 trillion in November to $4.095 trillion in December).  The Grand Total of foreign holdings (foreign official plus private) actually increased by $40 billion (from $6.126 trillion to $6.166 trillion).  Here is the easier-to-understand summary:  http://ticdata.treasury.gov/Publish/mfh.txt

Sorry_about_Dresden's picture

I didn't see a naked short position column.

If the numbers don't jive, there is over 100%, the extra is the UST sold short by an entity that doesn't possess the UST.

My head is spinning from digesting all this stuff. 

I see numbers on filings all the time that add up to, way over, 100% and find out later those are shorted shares.

Maybe UST uses the same accounting tricks. Why wouldn't they if it is industry standard?

Not saying it is or isn't. Just a thought.

Sam Spade's picture

I understand how one can short Treasury futures, but how does one short an actual Treasury bond?  I rest my case on the fact that long-term rates were essentially unchanged in the month of December.  That doesn't sound like massive selling to me.  (And the January data should be even more interesting, as the yield on the 10YR dropped by about 35 bps that month.)

Babaloo's picture

You borrow them, just like when you short stocks.  You pay the lender of the securities interest (the reverse repo rate) and you have to pay the new owner of the securities the coupon,  so it's an expensive process.

Yen Cross's picture

     Lets make this really easy.  Any long dated sovereign bonds, from any country, being used as collateral for F/X and credit<> short term notes, is/are " by decree", renamed the ANTWERP hedge. lol

  Jean Claude Juncker, and Mario Draghi> Certified by the Shengen ECB...

More images Jean-Claude Juncker
iggenFlot's picture
iggenFlot (not verified) Feb 16, 2016 10:41 PM

America needs to create a new security class of AAAA.  It would be only for the most prestigious, exclusive and superlative bonds.

Let's face it, the Chinese aren't selling Treasurys because they're afraid we'll default.  They're selling them because their own economy sucks and is on the cusp of imploding and they need to sell US bonds - the gold standard of paper - to raise cash to make ends meet.  It's essentially an endorsement for America's high quality debt.

Yen Cross's picture

  This is purely speculative. Tyler has my wheels turning.

  Can we expect Africas largest oil producerNigeria sovereign yields, to suddenly drop?

  Better yet.... I can't wait to see the CIA dropping pallets of YUAN to all their Freedum Fighters in Africa and the M/E.

 The oligarchs love chaos.

 

onmail1's picture

Soon u can export all the dollah to Venezuela

as toilet paper

those days are looming

buy gold & silver NOW

Colonel Klink's picture

Please wake me when the number is 480 billion.

Seer's picture

That'll come with flashing lights.  Unfortunately they'll be likely ones from nukes rather than from stock market lights.

Babaloo's picture

Don't listen to the conspiracy theorists.  The reality is that while $48 billion sounds like a big number, it's between 5-10% of one day's volume in the treasury market.  One day!  It's a drop in the bucket, and doesn't require some fantasy buyer to keep yields down, as you correctly surmise.

Seer's picture

Great point!

But, it's about the trend: you don't wait until the numbers look bad before doing something.  A 5% decline per day for 14 days would eventually result in a 50% drop! (at 10% it would take only about a week to do that)  And keep in mind that those trends are orderly; I doubt that when things get to a certain point that the decline would continue to be orderly.

datapanik's picture

Bill Holter hasn't slept for days.