China Is Again Selling US Treasuries As Foreign Central Banks Liquidate $45BN

Tyler Durden's picture

After December's brief dead cat bounce, in which foreign central banks bought $18.6 billion in US Treasuries, breaking a streak of 12 consecutive months of selling, in January they resumed their liquidation. According to the just released TIC data, foreign official institutions, which includes mostly central banks, but also sovereign wealth funds and various other official entities, sold another $44.9 billion in Treasuries, in line with the aggressive selling seen for most of 2016.

Curiously, the sales by foreign central banks were largely offset by purchases by private holders, mostly corporate institutions and foreign retail investors, who bought $37.9 billion in the month, the most since last March when they acquired $41 billion. Combining the two, foreigners sold a total of $7 billion in TSYs in January.

Additionally, on an LTM basis, due to greater sales last January when they sold $57.2 billion or $12.3 billion than in the most recent period, the 12 month total rose from $338 billion in liquidations to $325.7 billion, the highest since last May.

Across all US securities, foreigners ended up purchasing a total of $15.1 billion in US assets, consisting of equity and agency purchases of $15.1 billion and $12.5 billion, offset by sales of TSYs and Corporate bonds of $7 billion and $5.9 billion respectively.

Next, looking at two distinct holders of US paper, in January the Chinese selling resumed, and after Beijing bought $9 billion in US paper in December, in January it proceeded to sell most of that total, reducing its holdings of Treasurys from $1.058 trillion to $1.051 trillion, which brought it to $51 billion below the largest US foreign creditor Japan, who in January held $1.103 trillion.

Finally, in a surprising twist, while Saudi Arabia one year ago threatened to liquidate its US Treasury holdings, it has been doing just the opposite, and as shown in the chart below, in January it bought another $10 billion, taking its total to $112.3 billion, the highest total since April 2016. It appears that, if only for the time being, Petrodollar recycling is back on line.

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Boris Alatovkrap's picture

When China is sell US Treasury, who is sell to, and in what denomination is receive remuneration? US Dollar, no? So… is still hold US Debt…? How is swap of IOU from same dead beet so smart?

Boris Alatovkrap's picture

Wi no mo wan a mei kan mo ni, hu wan bai awa yu ei su tuleixiali?

Belrev's picture

George Soros to be investigated by State Department under Rex Tillerson as requested by US Senators

BigFatUglyBubble's picture

I thought they were hoarding gold.

Boris Alatovkrap's picture

You are not hear correctly, China is buy much "goard", is easy mistake.

auricle's picture

Anybody notice that some arms shipments are heading to Saudi Arabia at the same time they decided to start increasing their treasury holdings? Quid pro doh anybody? Will China continue to sell until a similar 'deal' is met with the US. What other technology can we accidentally allow to be pilfered from our intellectual domain? 

francis scott falseflag's picture

Then China take dollar and buy renminbi to keep from breaking 7.

Then Tyler publish moar story for Kyle Bass who looking for moar fools to follow him short

Then Kyle buy moar Prilosec

Moar belch for Kyle

Kyle berry smart

Miss Informed's picture

I wish I had a nickel for every time I hear someone say that.

sinbad2's picture

They are using the dollars to buy commodities, gold silver copper tin oil, you name it, they are buying it.

I believe it's their war chest.

Miss Informed's picture

If they are so smart why did they buy a trillion dollars of US Treasuries?

sinbad2's picture

So they can keep the value of the Yuan down, and make money selling manufactured goods. It's also a very effective doomsday bomb, if they dumped them all at once, the dollar would be totally valueless, and all the western economies would crash.

SmilinJoeFizzion's picture

selling bonds while rates are rising means a Chinese haircut on those bonds.

We Are The Priests's picture
"China Is Again Selling US Treasuries As Foreign Central Banks Liquidate $45BN"

When did they stop?  Did I miss something?

back to basics's picture

As long as Belgium is buying what does it matter who sells?

chubakka's picture

 wow surprise surprise

Just Another Vietnam Vet's picture

Ol Yeller is raisin rates big time.....    We gotta whif of that ol inflation here per JY.  

If I had a TRILLION or so in Bonds..... I might wanna sell some too. 

Kiss_My_Schnitzel's picture

if majority of us are catching on to whats happening, why are countries still playing the game?

sinbad2's picture

You can get much farther with a kind word and a gun than you can with a kind word alone.(Al Capone)

Uranium Mountain's picture

Buying Gold from the sale of US Grade AAA Junk Bonds.   Janet to repurchase the paper promises in the near future.