Foreign Central Banks Liquidate Record $405 Billion In US Treasuries As China Sells Most US Paper Since 2011

Tyler Durden's picture

The wholesale liquidation of US Treasuries continued in November, when according to the just released TIC data, foreign central banks sold another $936 million in US paper in November 2016, which due to an offset of $892 million in buying one year ago, means that for the 12 month period ended November, foreign central banks have now sold a new all time high of $405 million in the past 12 months, up from a record $403 million in LTM sales as of one month ago.

Where did the selling come from?

While Japan sold about $23 billion in November, its fourth month of consecutive selling, it was China which drove the selloff, dumping a whopping $66.4 billion in US Treasuries in its 6th consecutive monthly sale of US paper, and the biggest monthly selloff since December 2011. The monthly sale also brings China's total Treasury holdings to the lowest level since early 2010.

When combining China's with the Belgian holdings, an offshore center used by China to mask its purchases (and over the past two years sales) the correlation between combined Treasury holdings and China's total reserves suggests that this is where the action is at. And considering the reduction in reserves has continued into December, it is safe to assume that China continued to sell US paper to match the reduction of its foreign reserves which as a reminder declined, officially, by another $41 billion last month.

Curiously, reversing its recent trend, Saudi Arabia bought just over $3 billion in Treasury, and has added $10.7 billion in US paper in the past 2 months, the most since July 2006.

But most troubling was neither Japan's, nor China's selling, but all foreign holders of US Treasurys combined, which sold $70.8 billion, the most in one month ever, bringing their total holdings to 3.771 trillion, far below the $4.117 trillion held one year ago. On an annual basis, the drop was -8.4%, the biggest decline on record (don't blame Russia: "Putin" actually bought $12 billion in US paper in November).

* * *

As we pointed out one month ago, what has become increasingly obvious is that both foreign central banks, sovereign wealth funds, reserve managers, and virtually every other official institution in possession of US paper, is liquidating their holdings at a troubling pace, something which in light of the recent surge in yields, appears to have been a prudent move.

In some cases, like China, this is to offset devaluation pressure; in others such as various petroleum exporting nations - but curiously not Saudi Arabia in the past 2 months -  it is to provide the funds needed to offset the drop in the petrodollar, and to backstop the country's soaring budget deficit. In all cases, it may suggest concerns about a spike in future debt issuance by the US, especially now under the pro-fiscal stimulus Trump administration.

Who are they selling to? The answer, at least until August, was private demand, in other words just like in the stock market the retail investor is the final bagholder, so when it comes to US Treasuries, "private investors" both foreign and domestic are soaking up hundreds of billions in central bank holdings. As we said two months ago when we observed this great rotation in Treasuries out of official holders into private hands, "we wonder if they would [keep buying] knowing who is selling to them." Well, svereal months ago this changed, and after private investors had been happily snapping up bonds for 4 straight months, in September "other foreign investors" sold a whopping $31 billion, bringing the total outflow between public and private foreign holdings to $76.6 billion, the second highest number on record. In October, while foreign official entities sold another $45 billion, at least the pace of selling by private entities moderated somewhat, to "only" $18.3 billion. However, in November the trend appears to have reversed again, and private foreign buyers picked up some $731 million. Maybe they know something central banks do not?

Meanwhile, while just five months ago yields had tumbled to near all time lows, suddenly the picture is inverted, and long-yields are once again rising on concerns that not only could the ECB and the BOJ soon taper their purchases of the long end, but that Donald Trump is about to unleash a $1 trillion debt tsunami at a time when the Fed will not be available to monetize it, now that the Fed is again hiking rates.

While it is unclear under what conditions foreign buyers will come back - after all TSY yields have already jumped high enough to where US paper should be more than attractive to foreign official institutions - one thing is clear: as of this moment the selling strike not only continues but is accelerating, and should the foreign liquidation of Treasuries fail to slow, Yellen will soon have to plan how to not only abort the current rate experiment which continues to pressure yields higher around the globe, but to start thinking how to soak up all the excess supply instead.

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Jtrillian's picture

Did everyone get the memo that China sent out???

http://img.memecdn.com/Buy-Sell-Bye_o_17022.jpg

Canadian Dirtlump's picture

This has been going on now for what 2 years? It hasn't mattered yet, so as has been discussed, apparently the ESF still has enough room on their onyx card to cover what they need to cover.

 

Much like gold and silver suppression, it doesn't matter until it does. When that is? No idea. Check for mushroom clouds. I however eagerly await the day with my stack.

Pinto Currency's picture

Selling of bonds won't stop as LIBOR rising and central banks raising interest rates - this is credit tightening to collapse a credit bubble:

http://www.safehaven.com/article/43077/president-trumps-immediate-emergency

Same old recipe.

knukles's picture

It's just part of the currency and economic war.

Paul Kersey's picture

Well, if the Fed really is going to be raising rates, as Yellen claims, then these foreign entities are dumping these bonds at close to the peak of the market. The US market may be rigged, but that won't stop international central banks from buying low an selling high.

manofthenorth's picture

Chickens coming home to roost............

TICK-TOCK MOTHERFUCKERS !

xythras's picture
xythras (not verified) manofthenorth Jan 18, 2017 5:10 PM

Let's throw more money out the window. I know.. on F35 fighter jets:

http://dailywesterner.com/news/2017-01-18/f-35-in-crisis-as-pentagon-tes...

The F35 became a black hole for $

BaBaBouy's picture

Sooo ... Who The Fuck is buying All this Crack Coke Paper Fiats ???

remain calm's picture

"Yellen will soon have to plan how to not only abort the current rate experiment which continues to pressure yields higher around the globe, but to start thinking how to soak up all the excess supply instead"

Obviously, Grandma Yellen is going to buy the worthless paper sold by China with more worthless paper she will create out of thin air. How fucking hard is it to understand the Ponzi Scheme.....NOT

At the same time the bankers will be selling paper (make believe) gold, on the Comex they do not own to keep the price of real PHYSICAL gold down so dumb fuck America thinks evevything is good and the dollar has value. At the same time CNBS will be talking up the Dow 20,000....21,000.....22,000...

What a fucking joke this all is!

king leon's picture

Wait for it: Putin has hacked into the F 35 computers and infected them with a virus.

Secret Weapon's picture

Maybe no one really cares if it flies and the project was a cover for the diversion of funds to other projects or other pockets.  Just wondering.  Kind of Like HUD with wings and an engine. 

GreatUncle's picture

The one nobody in government will openly admit too.

roadhazard's picture

Hopefully it will not be melted in to a solid lump that you can't touch for 10,000 years.

GGuy's picture
GGuy (not verified) Jtrillian Jan 18, 2017 4:36 PM

BURRISH?

I woke up's picture

I wonder if their account number is 21214

Lynx Dogood's picture

The real question is?

 

When they are all selling. what are they buying?

 

 

Kayman's picture

Selling UST, getting USD, buying Yuan that other Chinese are selling.

10flippers's picture

how does this factor into the CFTC net positioning. If the seller is price insensitive

Lynx Dogood's picture

When all of there shit falls apart!!   I know what they are buying! US dollars and US Stocks!! Same as it ever was. Globaal Market keepers have faith in 2 things. That will not change anytime soon!!!!!

northern vigor's picture

Pretty smart of them...take a bit of cash out the bank every month and buy some gold, before the money becomes worthless.

Where' have I heard that before? 

 

Raffie's picture

Buy paper gold to drive the markets up, cash out crashing the price then buy real gold.

Rise and repeat.

SubjectivObject's picture

Now my half gallon looking juice bottle size sez 48 oz. rather than 64 oz.

GGuy's picture

You no rikey hoaxy changey?

Sudden Debt's picture

ehe... that's about half Trumps infrastructure fund for the next 4 years... in 1 month...

just putting it into perspective...

 

or the amount of money it takes to kill 100 farmers in Afghanistan...

 

Winston Churchill's picture

 You have to wonder what psychological effect hitting $20tn on debt might have.

My personal opinion is that Trump has been put in as the Liquidator of the US $ by Red Shield.

Kissinger is pulling a lot of the strings in his administration, notably Tillerson,Ross and Mattis, all in the same

Think Tank as K..

The Economist prediction of 2018 for the one world currency date keeps popping into my mind.

Something very drastic needs to happen soon if thats going to happen on schedule.

cowdiddly's picture

Feel lucky the Bankruptor in Chief got in.The alternative with 20T and your only able to sell 3.7T outside was the mandatory MyIRA

Winston Churchill's picture

Nothing is off the table.Remember Cede and Co holds title,not the pension schemes.

As part of the FedRes it will just pay off the US debt they hold.Who knows what covenants they got.

cowdiddly's picture

member that building that got flooded in New York with all the Records in the Hurriccane? Then after they got it pumped out all that soggy paper just spontaneously combusted into flame. POOF no records, chain of title, contracts,bondholders, treaty obs... nothin.

no worrys when Trump slaps those tarriffs and Triffins Dilemma starts kicking in good and hard they will bring out their spook Rickards to start squaking about the SDR again to meet your bankster rags schedule just like clockwork.

The Ponzi must go on.

assistedliving's picture

interesting Winston.  I thought Cede was just a transfer agent.  How does one find "what covenants they got" anyway?

cowdiddly's picture

you don't. they're one o those private corps just like the Federal Reserve. And just like them, you will never find out who the owners are, stakeholders or anything about them other than the front men. And the actually hold cert to every single stock you buy and it never transfers actually. Man don't get me down that rabbit hole again.

Winston Churchill's picture

Odds are its the same owners as the  FedRes.Their shares will be worth money even if the $ isn't.

Heads they win, tails you lose.

Kayman's picture

Archaeologists will find the bones of a unicorn before you see a one world currency. Unless you mean gold. 

Dame Ednas Possum's picture

What does the future of the Euro look like? 

Obviously once Switzerland and Swaziland, Korea and Kiribus are all using the same currency... and the tribe are happy... then all will be just well and dandy. 

GreatUncle's picture

The Economist prediction of 2018

George Osborne the UK chancellor was fixated in only doing things up until 2018 like 2019 didn't exist.

Chupacabra-322's picture

@ Winston,

Don't doubt for a second they haven't been restructuring since 2008. Won't be the first time the Criminal Fraud UNITED STATES, CORP. INC. went Bankrupt.

The Bankruptcy of The United States
United States Congressional Record, March 17, 1993 Vol. 33, page H-1303

Speaker-Rep. James Traficant, Jr. (Ohio) addressing the House:

"Mr. Speaker, we are here now in chapter 11.. Members of Congress are official trustees presiding over the greatest reorganization of any Bankrupt entity in world history, the U.S. Government. We are setting forth hopefully, a blueprint for our future. There are some who say it is a coroner’s report that will lead to our demise.

It is an established fact that the United States Federal Government has been dissolved by the Emergency Banking Act, March 9, 1933, 48 Stat. 1, Public Law 89-719; declared by President Roosevelt, being bankrupt and insolvent. H.J.R. 192, 73rd Congress m session June 5, 1933 - Joint Resolution To Suspend The Gold Standard and Abrogate The Gold Clause dissolved the Sovereign Authority of the United States and the official capacities of all United States Governmental Offices, Officers, and Departments and is further evidence that the United States Federal Government exists today in name only.

The receivers of the United States Bankruptcy are the International Bankers, via the United Nations, the World Bank and the International Monetary Fund. All United States Offices, Officials, and Departments are now operating within a de facto status in name only under Emergency War Powers. With the Constitutional Republican form of Government now dissolved, the receivers of the Bankruptcy have adopted a new form of government for the United States. This new form of government is known as a Democracy, being an established Socialist/Communist order under a new governor for America. This act was instituted and established by transferring and/or placing the Office of the Secretary of Treasury to that of the Governor of the International Monetary Fund. Public Law 94-564, page 8, Section H.R. 13955 reads in part: "The U.S. Secretary of Treasury receives no compensation for representing the United States?’

Gold and silver were such a powerful money during the founding of the united states of America, that the founding fathers declared that only gold or silver coins can be "money" in America. Since gold and silver coinage were heavy and inconvenient for a lot of transactions, they were stored in banks and a claim check was issued as a money substitute. People traded their coupons as money, or "currency." Currency is not money, but a money substitute. Redeemable currency must promise to pay a dollar equivalent in gold or silver money. Federal Reserve Notes (FRNs) make no such promises, and are not "money." A Federal Reserve Note is a debt obligation of the federal United States government, not "money?’ The federal United States government and the U.S. Congress were not and have never been authorized by the Constitution for the united states of America to issue currency of any kind, but only lawful money, -gold and silver coin.

It is essential that we comprehend the distinction between real money and paper money substitute. One cannot get rich by accumulating money substitutes, one can only get deeper into debt. We the People no longer have any "money." Most Americans have not been paid any "money" for a very long time, perhaps not in their entire life. Now do you comprehend why you feel broke? Now, do you understand why you are "bankrupt," along with the rest of the country?

Federal Reserve Notes (FRNs) are unsigned checks written on a closed account. FRNs are an inflatable paper system designed to create debt through inflation (devaluation of currency). when ever there is an increase of the supply of a money substitute in the economy without a corresponding increase in the gold and silver backing, inflation occurs.

Inflation is an invisible form of taxation that irresponsible governments inflict on their citizens. The Federal Reserve Bank who controls the supply and movement of FRNs has everybody fooled. They have access to an unlimited supply of FRNs, paying only for the printing costs of what they need. FRNs are nothing more than promissory notes for U.S. Treasury securities (T-Bills) - a promise to pay the debt to the Federal Reserve Bank.

There is a fundamental difference between "paying" and "discharging" a debt. To pay a debt, you must pay with value or substance (i.e. gold, silver, barter or a commodity). With FRNs, you can only discharge a debt. You cannot pay a debt with a debt currency system. You cannot service a debt with a currency that has no backing in value or substance. No contract in Common law is valid unless it involves an exchange of "good & valuable consideration." Unpayable debt transfers power and control to the sovereign power structure that has no interest in money, law, equity or justice because they have so much wealth already.

Their lust is for power and control. Since the inception of central banking, they have controlled the fates of nations.

The Federal Reserve System is based on the Canon law and the principles of sovereignty protected in the Constitution and the Bill of Rights. In fact, the international bankers used a "Canon Law Trust" as their model, adding stock and naming it a "Joint Stock Trust." The U.S. Congress had passed a law making it illegal for any legal "person" to duplicate a "Joint Stock Trust" in 1873. The Federal Reserve Act was legislated post-facto (to 1870), although post-facto laws are strictly forbidden by the Constitution. [1:9:3]

The Federal Reserve System is a sovereign power structure separate and distinct from the federal United States government. The Federal Reserve is a maritime lender, and/or maritime insurance underwriter to the federal United States operating exclusively under Admiralty/Maritime law. The lender or underwriter bears the risks, and the Maritime law compelling specific performance in paying the interest, or premiums are the same.

Assets of the debtor can also be hypothecated (to pledge something as a security without taking possession of it.) as security by the lender or underwriter. The Federal Reserve Act stipulated that the interest on the debt was to be paid in gold. There was no stipulation in the Federal Reserve Act for ever paying the principle.

Prior to 1913, most Americans owned clear, allodial title to property, free and clear of any liens or mortgages until the Federal Reserve Act (1913)

"Hypothecated" all property within the federal United States to the Board of Governors of the Federal Reserve, -in which the Trustees (stockholders) held legal title. The U.S. citizen (tenant, franchisee) was registered as a "beneficiary" of the trust via his/her birth certificate. In 1933, the federal United States hypothecated all of the present and future properties, assets and labor of their "subjects," the 14th Amendment U.S. citizen, to the Federal Reserve System.

In return, the Federal Reserve System agreed to extend the federal United States corporation all the credit "money substitute" it needed. Like any other debtor, the federal United States government had to assign collateral and security to their creditors as a condition of the loan. Since the federal United States didn’t have any assets, they assigned the private property of their "economic slaves", the U.S. citizens as collateral against the unpayable federal debt. They also pledged the unincorporated federal territories, national parks forests, birth certificates, and nonprofit organizations, as collateral against the federal debt. All has already been transferred as payment to the international bankers.

Unwittingly, America has returned to its pre-American Revolution, feudal roots whereby all land is held by a sovereign and the common people had no rights to hold allodial title to property. Once again, We the People are the tenants and sharecroppers renting our own property from a Sovereign in the guise of the Federal Reserve Bank. We the people have exchanged one master for another.

This has been going on for over eighty years without the "informed knowledge" of the American people, without a voice protesting loud enough. Now it’s easy to grasp why America is fundamentally bankrupt.

Why don’t more people own their properties outright?

Why are 90% of Americans mortgaged to the hilt and have little or no assets after all debts and liabilities have been paid? Why does it feel like you are working harder and harder and getting less and less?

We are reaping what has been sown, and the results of our harvest is a painful bankruptcy, and a foreclosure on American property, precious liberties, and a way of life. Few of our elected representatives in Washington, D.C. have dared to tell the truth. The federal United States is bankrupt. Our children will inherit this unpayable debt, and the tyranny to enforce paying it.

America has become completely bankrupt in world leadership, financial credit and its reputation for courage, vision and human rights. This is an undeclared economic war, bankruptcy, and economic slavery of the most corrupt order! Wake up America! Take back your Country."

Image: United States Congressional Record, March 17, 1993 Vol. 33, page H-1303

http://www.afn.org/~govern/bankruptcy.html

small towel's picture

This is an interesting comment from Yellen.

zerohedge ‏@zerohedge 28m28 minutes ago
YELLEN: EXPECTATIONS FOR GRADUAL RATE RISES PARTLY EXPLAINS PRICE-EQUITY RATIOS.

Looks like interest rates are going higher, and High P E ratios is going to get the blame for the crash when it happens. The language lets the Fed off the hook. It was "Bubble Territory" they will say.

This is their 'escape' excuse.

shizzledizzle's picture

Janet had her hands full today... Tirelessly hitting control P. 

Dirtnapper's picture

Looks like it's in the making for another Webbot hit.

SmilinJoeFizzion's picture

Let me guess- Gartman bought them all at a premium

Yen Cross's picture

 Stairway to Heaven    It makes me wonder....

shizzledizzle's picture

Funny I thought they were supposed to start "Unwinding".

MASTER OF UNIVERSE's picture

Chapter 11 Bankruptcy for the Banana Republic in the blue, red, and white, and the Cheeto-head tin pot dictator textbook Psychopath.

 

I'm sure he will have much to talk about with Kim Jung Un & Robert Mugaby.

 

Bon Voyagee', America!

Kayman's picture

MasterBater of the Perverse.

Add the Ontario and Quebec debt to the declared Canadian Fed Debt and your per capita debts exceeds the U.S. per capita debt. Go back to sucking your thumb.

MASTER OF UNIVERSE's picture

True, Gayman, but as CANADA is indeed fucked, America is fucked-er based on the numbers alone involved in the Economic Hegelian Death Spiral whereby the population of the USA will implode along with the $1.5 Quadrillion dollar USD Dark Pool Derivatives Universe, ShmuckO. More complex systems fail faster than less complex systems. And nukes get pointed at increasingly complex systems rather than less complex systems.

 

Son of Captain Nemo's picture

I have this visual of Janet Yellen in her Pulcinella attire attempting to keep all of the very expensive china airborne right before they all come crashing "terra firma"!...

Please ask me how much I'm loving this!!!!

Bam_Man's picture

Wait until everyone finds out that the bank still pays you 0.09% on your "High-Yield Money Market Account", even after the Fed has raised rates to 2.00%.

A 10-year Treasury yielding close to 3.00% will look mighty good.