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China Dumps $100+ Billion In USTs In December Per Revised TIC Data; UK Is Now Russia's Shadow Buyer

Tyler Durden's picture




 

Every year in February, the Treasury department releases its adjustment to foreign purchases of Treasury bond holdings as of the previous June (with revised and overriding estimates for all the intervening months in the interim, as well as previous monthly forecasts). It did that earlier today. And while many may have been expecting the revision to show that contrary to Zero Hedge claims China has in fact been building up its Treasury stake (following the now traditional transfer of UK purchases to China), the reality is that not only has China indeed been dumping US exposure (first reported by us previously when we observed the plunge in holdings in the Fed's custodial account), selling over $100 billion in Treasurys in December alone (bringing its total to $1152 billion, and down 12% from its June total of $1307 billion) but that probably far more curiously, the UK is no longer a shadow buyer of Chinese bond accumulation and instead has become a secret accumulator of Russian holdings.

First, here is a link to the revised TIC data as of this afternoon. That lack of Chinese trade surplus is really starting to bite not only China, but also the US, which as we noted last time, will be forced to rely ever more on domestically funded purchases of USTs: read Primary Dealers and the Fed, as the rest of the world developing world, also known as US Treasury buyers, clams down and exports far less to a recessionary Europe and contracting America. As the chart below shows, Chinese holdings are sliding, no matter how one cuts the data.

So compared to the pre-revision Chinese holdings number, which was $1101 billion, China is still accumulating bonds, right? Well, not really, because on one hand a decline is a decline even relative to a different benchmark. But more importanly, most had assumed that the UK's pre-revision number of $414.8 billion in Treasury holdings would be allocated almost entirely to China. As it turns out it wasn't.

In fact of the post-revision UK holdings of $112.4 billion, at best $50 billion, or 17% was allocated to China. Where did the rest go? Well, of the top holders, $40bn went to Japan, $25 billion went to the Oil Exporting countries, $20 billion went to Brazil (which is becoming an increasingly dominant buyer of US paper), while Carribean Banking Centers (aka hedge funds) saw about $50 billion allocated to them.

Yet the biggest surprise, is that contrary to previous speculation, Russia has not been dumping its Treasurys. In fact the country's holding of $150 billion are the same as they were back in June, and over $60 billion more compared to the pre-revised number.

In other words the biggest beneficiary of stealthy UK accumulation is no longer China (which is not accumulating US paper at all and quite the contrary), but Russia.

Russian holdings pre-revision:

and post:

Then again, this is the TIC data, which is notoriously wrong all the time. Best advice: keep a track of that Chinese trade surplus. If it becomes a deficit (just like Japan did recently), that is the first signal that things are changing dramatically from an international flow of funds perspective. It also means that unless the US finds subtitute demand, most likely from within, the only remaining buyer will be the entity that already has the largest holding of US paper - the Federal Reserve.

 

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Wed, 02/29/2012 - 19:24 | 2210267 maxmad
maxmad's picture

DUMP, Bitchez!

Wed, 02/29/2012 - 19:32 | 2210293 Zero Govt
Zero Govt's picture

pattern recognition par excellence there Maxmad

Gold in, US Treasuries/Trash out ..by gum, i think China gets it

 

Wed, 02/29/2012 - 19:37 | 2210308 maxmad
maxmad's picture

Yep China gets it, just scratching my head on Russia!  "Putin" is up to something

Wed, 02/29/2012 - 20:10 | 2210324 Don Birnam
Don Birnam's picture

Continued Chinese liquidation of treasurys is to be expected, consistent with the performance of the Chinese economy.

Wed, 02/29/2012 - 20:31 | 2210430 laomei
laomei's picture

Not really... China's still doing absolutely fine.  What you are seeing is China diversifying assets and moving towards a delinking with the US before it's too late.  When the dust settles, you'll be seeing a world very much controlled by Chinese interests.

Wed, 02/29/2012 - 20:46 | 2210461 Hugo Chavez
Hugo Chavez's picture

Hahaha!

Its been a while since the "china is taking over the world crowd" has come out to play.

I am old enough to remember the same thing being said about another asian nation in the early 80's.

Good luck usa haters. Japan delinked during the plaza accord. They died.

I so wish china would delink. We can compete with anyone who doesnt attempt to artificially suppress their currency

Wed, 02/29/2012 - 20:58 | 2210492 shuckster
shuckster's picture

Correct Hugo - China wants nothing more than to control the Orient. That's all they've ever wanted. If trading with "the West" helps them achieve that goal, then they'll do it, but they're interests are their half of the Pacific, and as far West as the Himalayas 

Wed, 02/29/2012 - 20:58 | 2210493 laomei
laomei's picture

Japan was stupid and listened to US demands.  Generally, any country who listened to US advice got smacked hard in '97.  China didn't.

What you'll be seeing from China is dumping the low grade crap that importers demand onto lesser economies while focusing on high-value commodities.  By controlling the material inputs, China will still get a piece of the action on the lessers while moving in on the high-values.  This ain't Japan.... it's an entirely different setup.

Wed, 02/29/2012 - 21:03 | 2210513 shuckster
shuckster's picture

If China is moving into a consolidation phase, I think that's a pretty good indicator that they don't see the economy expanding much in the future - meaning, they won't be there to save the US when it's economy collapses because, afterall, why would they? The US won't be able to buy their exports anymore...

Wed, 02/29/2012 - 22:24 | 2210804 jcaz
jcaz's picture

LOL-  China doesn't have the faintest idea what a "high-value commodity" is-  garbage in, garbage out, all across their board.

China still deludes themselves that they're anything more than a low-grade player-  they've been lagging behind in that regard for 400 yrs.......

Wed, 02/29/2012 - 22:54 | 2210890 squidward
squidward's picture

"Japan was stupid and listened to US demands."

Exactly, Japan's inflection point was actually in 1985 with the plaza accord. It was all down hill for them after that.

Thu, 03/01/2012 - 00:57 | 2211275 Manthong
Manthong's picture

Speaking of our Nipponese friends..

Don't they have to raise a few yen in March?

Wed, 02/29/2012 - 21:02 | 2210507 LowProfile
LowProfile's picture

If the US manages to get the country back, then we're golden.

If not...  I'm outta here.  G' luck t' y'all.  Enjoy the scraps of empire.

Wed, 02/29/2012 - 21:11 | 2210526 Max Fischer
Max Fischer's picture

 

 

So now we have information that China, our largetest creditor, was a net seller of treasuries in 2H2011, and yet the 10Y rallied, falling from ~3% last summer to end the year at 1.88%.  And that was even though a HISTORIC downgrade!

This is actually fantastic news!  As China slowly exchanges our debt for hard assets (which everyone expects), there still remains an insatiable demand for our treasuries. Whatever China isn't buying, Japan and our own bank is. Perhaps the US is not as dependent on China as everyone thinks.  I'd rather owe Japan or ourselves (the Fed) at <2% than China at 3%+. 

In fact, the more I think about this, this might be the most bullish article ever posted on ZeroHedge.

Max Fischer, Civis Mundi

Wed, 02/29/2012 - 23:36 | 2211030 Bringin It
Bringin It's picture

Max - The Fed, conjuring new script to buy more bloated US Gov debt is bullish in what way exactly?  Whatever China does, the fate of our ponzi is known.

Wed, 02/29/2012 - 23:27 | 2210997 stocktivity
stocktivity's picture

So Benny prints dollars out of thin air...then uses these newly printed dollars to buy US tres bonds...which goes to pay for the government's spending.  Wow...and Houdini was called the greatest magician.

Thu, 03/01/2012 - 01:30 | 2211369 DeadFred
DeadFred's picture

The Fed isn't doing that at least on record so who really is buying this paper? I could  understand it when everyone said Europe was dead but they act as if it's fixed now so where are the buyers of this astounding amount of paper? Who is buying so they can have the honor of losing money to inflation, even at the bogus inflation levels?

Thu, 03/01/2012 - 01:41 | 2211386 Belteshazzar
Belteshazzar's picture

Bennybucks bitchez!

Sun, 03/11/2012 - 16:54 | 2245527 WhiteNight123129
WhiteNight123129's picture

Hi Old beautiful (it is your name right?) , China will have a transition period, but overall China will do fine if it pushes hard on Thorium energy (China is the leader on that). The West has been in trade deficit between 16th century and 1820 (until Silver from Mexico unreliable coinage created problems + opium wars from brits and french on second war, my apologies for that as a french man, that is the only way the West found tobalance trade and finally demonetization of Silver hurtChina). I think China would do well not to do British and American mistakes (demonetization of Silver and rigged price of Gold for the Brits under Gold standa4d). The French favored neutral money that is bimettallism (which implies competition between forms of money), empire money (Gold mono metal standard and the following ones until the current USD fiat system) lead always to wars and systemic unemployment in the long run for the country using it. If you lead, lead well, use the no seignoriage money for foreign trade like the Chinese emperor money did (Silver standard using Mexican coins), avoid doing our mistakes of empire money, Gengis Khan empire fiat led to diaster for China (flying paper disaster), roman empire money denarius ended completly debasee. This new system could be done with HKD (it is a non fiat paper curency with no central bank, ergo noseignoriage since no printing). HKD would be pegged to multiple foreign currencies baesd on trade with adjustement managed by HKMA and each of central banks of countries actually trading worldwide. No country would be able to collect segniorage outside of its country, it would be fair, the HKD would reflect trade flows in aggregate, it would be stable. It would not lead to wars.

Wed, 02/29/2012 - 21:05 | 2210518 Buck Johnson
Buck Johnson's picture

It kinda brings back to the forefront the massive 15 trillion dollar transfer that a MP of england brought up a few weeks ago in the UK.  Maybe the debt that is being bought by undisclosed buyers oversees is actually the US using the UK and other UK territories as cover.  So in effect most of the US treasuries are being sold to the US and being bought to the US.  This game is going to end very very badly, trust me.

Wed, 02/29/2012 - 19:25 | 2210268 ZippyBananaPants
ZippyBananaPants's picture

They are buying Apple

 

Wed, 02/29/2012 - 19:27 | 2210279 Zero Govt
Zero Govt's picture

not much else in America worth much

GE, GM, USD ..you're avin a larf

Wed, 02/29/2012 - 21:01 | 2210504 shuckster
shuckster's picture

Apple's current MC means each employee is worth $833,000

Wed, 02/29/2012 - 21:31 | 2210575 unrulian
unrulian's picture

peanuts.....Silver Wheaton ...each employee is worth 17.6 million

Wed, 02/29/2012 - 19:27 | 2210276 non_anon
non_anon's picture

who shall be the one without a date when the music stops?

Wed, 02/29/2012 - 19:28 | 2210283 Zero Govt
Zero Govt's picture

Bubble Ben

...still blowing bubbles to the grim end

Wed, 02/29/2012 - 19:28 | 2210282 spiral_eyes
spiral_eyes's picture

More Chinese liquidation. What a surprise. 

Petrodollar being squeezed out of Eurasia.

http://azizonomics.com/2012/02/28/iran-squeezes-the-petrodollar/ 

Wed, 02/29/2012 - 21:05 | 2210516 shuckster
shuckster's picture

A 10% reduction Treasuries isn't a liquidation

Mon, 03/05/2012 - 11:09 | 2223829 TruthHunter
TruthHunter's picture

10% IN ONE MONTH ISN'T A LIQUIDATION?

Wed, 02/29/2012 - 20:01 | 2210290 kill switch
kill switch's picture

Zerohedge in the news!!!! China dumping everything AMERIKKAN!!!

 

http://www.youtube.com/watch?feature=player_profilepage&v=cJg99tGolNI

Wed, 02/29/2012 - 20:23 | 2210416 Dead Canary
Dead Canary's picture

THAT was Kewl!

Wed, 02/29/2012 - 19:31 | 2210292 FurZo
FurZo's picture

On the postitive side, bond purchases will increase with PIMCO's activly managed bond ETF, which will allow foreingers to activly buy USTs. While private purchases of bonds will not make up for selling by soverigns, it will lessen the blow.

Wed, 02/29/2012 - 19:34 | 2210299 laomei
laomei's picture

Been saying this for a long time... China dan dump that crap anytime it wants to and has been by buying up resources and assets that actually are worth a damn and paying for them with USTs.

 

Which of course begs the question, what has China been buying up? :)

Wed, 02/29/2012 - 22:26 | 2210814 BayAreaAlan
BayAreaAlan's picture

I don't think you know what "begs the question" means.

Thu, 03/01/2012 - 01:33 | 2211375 chump666
chump666's picture

Well you are terrible investors.  Gold?  No, more likely chasing yield, say Europe again only to be brutalised (again) once Europe reveals how burned they are with inflation = bonds going down the toilet. 

Go nuke the ECB, they set up the biggest con on Euro bonds since Hitler's Operation Bernard https://en.wikipedia.org/wiki/Operation_Bernhard

Wed, 02/29/2012 - 19:34 | 2210301 Tsar Pointless
Tsar Pointless's picture

Treasury bond interest rates go UP, "budding" housing recovery goes BOOM, job market in US remains in eternal dirt nap.

Oh, and I can think of a few other things that will go BOOM, too.

Wanna guess?

Wed, 02/29/2012 - 22:43 | 2210860 Zero Govt
Zero Govt's picture

a). Bummas election hopes  b). California, New York and Detroit  c). X-Factor 2013

Wed, 02/29/2012 - 23:31 | 2211013 stocktivity
stocktivity's picture

Do you really think Mitt can defeat Obama? Wish it were so but no way in hell.

Wed, 02/29/2012 - 19:34 | 2210302 selectricity
selectricity's picture

Chinese deposits and off-balance sheet loan growth has collapsed:

 

http://www.dailycollateral.com/2012/02/29/baml-is-very-worried-by-signs-...

Wed, 02/29/2012 - 20:12 | 2210394 laomei
laomei's picture

Chinese have been diversifying and if you keep cash in the bank just sitting there you are a god damned fool.  Lock that up in bonds for a nice safe 45-60 days at a time and reap annualized 7% return without any effort at all.  Or go on a gold buying spree like everyone has been doing.

The government here DOESNT want you to just leave it sitting around and that's why the interest at banks is only 0.5% on cash deposits.

 

If you are busy running the numbers, let's see the numbers on the big4 exclusively... what you will be seeing is that the big4 are basically doing nothing weird or strange, while the small pointless banks are suffering.  Outside of the big4, no one in China cares if a small pointless bank dies or gets eaten up.

Wed, 02/29/2012 - 21:08 | 2210523 shuckster
shuckster's picture

Inflation is overblown - when bonds start defaulting, cash is going to look a lot better. And with gold at $1700 an ounce, it's not very appetizing either

Wed, 02/29/2012 - 19:44 | 2210321 johngaltfla
johngaltfla's picture

China is running out of dance partners to play "extend and pretend" with and needs cash desperately. Thus the rush to turn the Yuan into a viable currency for world foreign exchange. They ar burning through cash at a frightening pace.

Wed, 02/29/2012 - 20:53 | 2210477 Hugo Chavez
Hugo Chavez's picture

You got it.

They want to expand their money supply but have others hold it as reserve. The deficit without tears thingy.

It wont happen until china is more open and transparent with their financial system, but to do that means loss of control in their aurhoritarian command economy.

Either way they lose and we in the usa win.

Wed, 02/29/2012 - 22:20 | 2210790 johngaltfla
johngaltfla's picture

Uh, we don't win. They will be liquidating our assets they hold. First the bonds, then the ag futures, and then real estate, then whatever they can.

We, being the equivalent of Greece on 'roids lose big time.

Or has the world "deflation" been eradicated in the latest dictionaries by the Fed also?

Wed, 02/29/2012 - 19:48 | 2210332 Sandoz
Sandoz's picture

Gotta love how the fools on this site assume that the Chinese are dumping because of the perceived quality of USTs. Yeah, that story fits in with your end of the dollar theory, but it's also a delusion. 

Ask yourself this, why did China buy treasuries in the first place? Now think about what would cause China to need fewer treasuries. See where this is going?

Wed, 02/29/2012 - 19:52 | 2210345 Tyler Durden
Tyler Durden's picture

Did you miss the various parts in the article that talk about "trade surplus" (or lack thereof)?

Wed, 02/29/2012 - 19:55 | 2210353 Sandoz
Sandoz's picture

I should have been more clear. I meant the fools commenting on this article (see first few comments). I don't take issue with the article itself. 

Wed, 02/29/2012 - 20:56 | 2210486 Hugo Chavez
Hugo Chavez's picture

You cant change their minds. Just fade their foolish investments if any of these basement dwelling china lovers still living with their parents actually have any.

In a few years all this will be perfectly clear in hindsight.

Wed, 02/29/2012 - 22:49 | 2210874 Zero Govt
Zero Govt's picture

"In a few years all this will be perfectly clear in hindsight."

My crystal ball is crystal clear on the future. Benny carrying the bag (sack of shit) from Wall Street and Washington (Bennys bag is full of their crap already)

Next piss-easy question please...

Thu, 03/01/2012 - 00:31 | 2211197 JW n FL
JW n FL's picture

 

Tyler Durden

Did you miss the various parts in the article that talk about "trade surplus" (or lack thereof)?

http://www.youtube.com/watch?v=PErUiAyVoGc I figure that a song can say it better than I could, ever..
Wed, 02/29/2012 - 19:50 | 2210335 Coolidge Low
Coolidge Low's picture

http://www.imf.org/external/pubs/ft/wp/2012/wp1255.pdf

Coincident Indicators and Capital Flows

Capital flows in Real Time (nearly real time)

http://www.epfr.com/

Thu, 03/01/2012 - 00:40 | 2211226 JW n FL
JW n FL's picture

 

 

This is reported numbers only..

No Batts? http://www.batstrading.co.uk/market_data/dark_pool/ how can you track th demise of Europe and thusly the First Wave of Contagion?

I wont even touch how much money is leaving China via http://fixglobal.com/content/dark-pools-asia-real-story.

I have a Spread sheet with $15 Trillion in loans from the FED https://docs.google.com/spreadsheet/ccc?key=0Aq7CIo3B6RWfdDlTRWk5SnVOTUp1bG4wMXdPMnV2SUE

So? what exactly are these guys offering?

Public info for a fee?

Kudos! there's a sucker born every minute!

Wed, 02/29/2012 - 21:00 | 2210336 Wakanda
Wakanda's picture

The Brits may be bastards, but they are not stupid.

Buying Russia is buying the future of Europe.  Follow the pipelines.

Edit:  Clarification - The Brits are bastards for foolishly disarming the lower classes.  Crime is still soaring.

Thu, 03/01/2012 - 07:44 | 2211756 EscapeKey
EscapeKey's picture

My favourite part is that Ireland have bought treasuries to the tune of 25% of their GDP over the past year. And the Belgians have bought to the tune of 20% of their GDP.

If this is to believed, of course.

Wed, 02/29/2012 - 19:53 | 2210348 SilverIsKing
SilverIsKing's picture

What's going to be Bernanke's excuse when the shit really hits the fan?

Wed, 02/29/2012 - 20:14 | 2210397 blunderdog
blunderdog's picture

His mandate is price stability and full employment, he's not caught up in the day-to-day operations of shit and fans.

Wed, 02/29/2012 - 20:01 | 2210370 ZeroPower
ZeroPower's picture

Wierd, treasuries still super well bid despite this news of China/Russia etc dumping all their holdings. Shadow buyer anyone?

Wed, 02/29/2012 - 20:09 | 2210380 Whiner
Whiner's picture

This is Premier Putin on the line. Is this Premier Jaiboa? Oh yes,
please. Good to hear your voice today. Sorry about election disturbance, but sheeple will fall back in line soon. No problem. Comrade Jaibao, are we still good on fiscal policy: dump dollar notes and store all gold production while buying western gold leasing? Oh yes, yes, Comrade. As they say in American Zero Hedge "Stackem, Bitchez!" Ha-Ha-ha! But not too fast, Comrade. Are you going to squeezes good and hard Europe on gas this frigid winter? Yavoh, Comrade. Are all currency exchanges now set with Mullahs, Chavez, Turkey, the Red Dots and the two of us? All clear and look forward to doing increasing business without but-wipe dollars! Hah-hah-hah! We even are buying Japanese Bonds. Join with us, She will make a fine colony soon. Call back on high secure line regarding Gulf operations. Yes, yes. Right away, Comrade. Click!

Wed, 02/29/2012 - 20:13 | 2210395 Manthong
Manthong's picture

"most likely from within"

Well, the good thing is that when the Fed ends up with most or all of the US debt it does not have to worry about being subordinate to itself.

                       But with all the movement towards international socialism in the US, will it subject its bonds to foreign law?

Wed, 02/29/2012 - 20:44 | 2210455 ThisIsBob
ThisIsBob's picture

If the Fed ends up owing all the debt then it really doesn't have to be paid, right?

Wed, 02/29/2012 - 21:04 | 2210515 itstippy
itstippy's picture

The U.S. Treasury is obligated to redeem maturing Treasury Bonds held by the Federal Reserve. 

The Federal Reserve is obligated to turn the proceeds from maturing Treasury Bonds it holds over to the U.S. Treasury.

So when the Federal Reserve buys US Treasuries with "money" it creates out of thin air (Quantitative Easing 2) we have monetization of the debt.  A caveman could understand the circularity. 

That's why there's a TWIST.

Wed, 02/29/2012 - 23:10 | 2210944 Whiner
Whiner's picture

Tippy. I say there, Good Sir. If The Bernanke prints and buys every once and future US bond, then ought not he to say to Timah, "Your country's debts are forgiven. Go, and sin no more." This could be bullish, but not perhaps for GLD. But it doesn't seem right, somehow. But who would object?

Wed, 02/29/2012 - 20:13 | 2210396 Dead Canary
Dead Canary's picture

I smell something funny in here.

Wed, 02/29/2012 - 21:08 | 2210521 Osmium
Osmium's picture

+5 for the avatar!

Wed, 02/29/2012 - 20:40 | 2210442 jimmyjames
jimmyjames's picture

As world trade decreases it's normal for bond purchases to decrease as income for trade surplus countries decrease-also alot of the supposed 3 trillion in foreign reserves that are held by China are really not reserves that China can do what it wants with-

That is hot money sitting there and it has a two way flow-in and out-We seen it move out in 3 days of heavy demand in 2008 and if China experiences any sort of crash-look for the hot money to vacate China just as fast-

I'm sure the Chinese have that foreign investment money sitting in short term US paper so it can easily be accessed-

Those who think the Yaun has a hope in hell of becoming a reserve currency should understand why China holds hot money in reserves-

The reason is because the Yaun is not liquid enough to take to the currency floor and convert back into other currencies-in a panic-

Their banks are not equipped to handle the hot money flows-unless it already sits in whatever foreign currency that is called upon-

Wed, 02/29/2012 - 20:59 | 2210499 Spanish Lizard
Spanish Lizard's picture

at that rate it would take them about 10 months to ditch the rest

 

Wed, 02/29/2012 - 21:00 | 2210501 Kevlar Akubra
Kevlar Akubra's picture

There is nothing on earth that is finer

Than all the cheap stuff made in China

It may not be strong

Or work very long

But at least it leaves cash for the diner

Wed, 02/29/2012 - 22:27 | 2210813 Poor Grogman
Poor Grogman's picture

It's no wonder that Chinese tourists don't spend much money on t-shirts or other stuff, when everything in the souvenir shops is made in China in the first place.

Imagine going on holidays and all you find to buy is shite made by your own co workers.

Good business model this tourism is LOL.

Wed, 02/29/2012 - 21:09 | 2210530 chump666
chump666's picture

China is confused with BS stats a plenty.

Wed, 02/29/2012 - 21:15 | 2210537 lolmao500
lolmao500's picture

China is buying Japan...

http://www3.nhk.or.jp/daily/english/20120226_21.html

He says many Japanese firms that cannot obtain loans from banks are having to rely on Chinese funds to keep their businesses afloat.

He predicts there will be more cases like this in the future.

Wed, 02/29/2012 - 21:39 | 2210603 Yen Cross
Yen Cross's picture

 Did you catch the recent JPY capital spending print? +7.6% on est.-6.4%. If China is buying Japan , it's a proxy to Europe.

Wed, 02/29/2012 - 21:36 | 2210587 Yen Cross
Yen Cross's picture

Ya got to love it, and Merkozy thinks a " global transaction tax", would fix all the EU's Ills. Cameron & Co. and London( financial district), must be giggling their arses off!

Wed, 02/29/2012 - 21:46 | 2210633 deflator
deflator's picture

 I think lessening UST holdings by China is probably more attributable to higher internal consumption than weakening exports. I do believe that China's exports probably are weakening as a result of softer demand due to lackluster growth in developed countries. Those developed countries are printing money left and right and have substantial social safety nets. China has been putting a lot of new cars and trucks on the roads the past 5 years. I would expect gasoline and diesel fuel demand in China to be a better guage of China's exports than its UST holdings.

Wed, 02/29/2012 - 22:09 | 2210747 web bot
web bot's picture

Years ago... I had this thought... when economic shit hits the fan, it's going to have global implications... and now we're seeing what that looks like.

I'm now having another thought... the first shot to be fired at an enemy in the next great world war... will be done from the office of a central bank.

Wed, 02/29/2012 - 22:53 | 2210882 q99x2
q99x2's picture

If the Fed buys treasuries...would that be like Bennie playing with Timmy or just Ben playing with himself?

Wed, 02/29/2012 - 23:16 | 2210965 fcamargoe
fcamargoe's picture

This could be a sign that indeed inflation is much higher than the 'official' reported figures and instead of absorbing the excess liquidity from the infrastructure binge they have decided to let their exchange rate marginally appreciate. 

Wed, 02/29/2012 - 23:55 | 2211092 Yen Cross
Yen Cross's picture

 Damn you guys KICK Ass! The crosses ( VIA) the yen, are extremely overbought from month end flows. Hint/ Hint

Thu, 03/01/2012 - 01:21 | 2211350 chump666
chump666's picture

Yo Yen. Everything is overbought.  Gold shock has yet to filter through, brutal sell off last session. Now the LTRO is done, EUR shorts will pile up as the PIIGS yields start to go up again.

As for UST's, China is forcing US rates up.  Why not?  They hold a ton of USDs and will buy more (corp sector) to offset Chinese inflation.  The major Gold sell off is indicative of the global markets reacting to the oil inflation blowout.  Rates are going up.  ECB is the major blame here as Euro bonds get dumped again.

Anyway, major correction on the way.

Thu, 03/01/2012 - 02:05 | 2211447 Yen Cross
Yen Cross's picture

I love ya Chump666. China is long U.S.

  You are seemingly ahead of me? Why ask?

 

     I own some XAG/XAU. Let's get realistic? 

Thu, 03/01/2012 - 02:00 | 2211436 Yen Cross
Yen Cross's picture

 I'm short the crosses. I'm also short Northern Europe. Those German Employment #'s are BULL SHIT!

 

 Just like China!

Thu, 03/01/2012 - 03:55 | 2211594 Hobbleknee
Hobbleknee's picture

I thought China only had $800 billion in treasuries pre-2008.  Did they buy more, and now they're seliing off again, or has my memory failed?

___________________________________

http://www.comparegoldandsilverprices.com/

Thu, 03/01/2012 - 05:40 | 2211682 cnhedge
cnhedge's picture

worse china trade deficit=sell treasury, indeed.

http://www.jinrongbaike.com/
http://www.cnhedge.com/

Thu, 03/01/2012 - 08:52 | 2211886 covert
covert's picture

the chinese are starting to wise up, time for us to also.

http://expose2.wordpress.com

 

Thu, 03/01/2012 - 10:08 | 2212087 Tod E. Tosspot
Tod E. Tosspot's picture

You can't assess fixed income strategies by face value alone. You have to know what's going on under the covers, namely duration. The data series clearly shows that in the aggregate foreign holders have dramatically reduced holdings of bills, while expanding holdings of notes and bonds. Unfortunately it doesn't show this on a country-by-country basis. It's possible that China was stretching its maturities to increase yield, and even participating in Operation Twist at the USG's request.

When rolling from bills to longer maturities within the same issuer you can't reinvest the same amount of money, or you'd be dramatically increasing your duration (aka exposure aka risk) to said issuer. Without knowing which holdings matured or were sold and which were bought, it's impossible to gauge the behavior of any single country from this data. Did China reduce its exposure to US debt? Maybe. Did China maintain its exposure (or increase it)? Again, maybe.

Thu, 03/01/2012 - 13:46 | 2213256 David Merrill
David Merrill's picture

Thanks for the Article! I noticed this morning that China has weaponized food.

First Hillary insulted China for not getting into Syria's affairs:

https://docs.google.com/open?id=0B1EaV_bU7VImQW5hekRkd0xUMi1LdnpBQ2hUelRnZw

Then China finally brokers a deal with North Korea but using America's food for money!

https://docs.google.com/open?id=0B1EaV_bU7VImdVVKTld5U3ZTT1dVcHVOYVRKUlowQQ

Sun, 03/04/2012 - 17:35 | 2222492 sickray
sickray's picture

china has ben buying up australian farming land that's for sure, and developing their own mining operations

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