Foreigners Dump $74 Billion In Treasurys In 6 Consecutive Weeks: Biggest Sequential Outflow In History

Tyler Durden's picture

Over the weekend, we observed the perplexing sell off of $56 billion in US Treasurys courtesy of weekly disclosure in the Fed's custodial account (source: H.4.1) and speculated if this may be due to an asset rotation, under duress or otherwise, out of bonds and into stocks, to prevent the collapse of the global ponzi (because when the BRICs tell the IMF to boost its bailout capacity you know it is global). We also proposed a far simpler theory: "the dreaded D-day in which foreign official and private investors finally start offloading their $2.7 trillion in Treasurys with impunity (although not with the element of surprise - China has made it abundantly clear it will sell its Treasury holdings, the only question is when), has finally arrived." In hindsight the Occam's Razor should have been applied. Little did we know 5 short days ago just how violent the reaction by China would be (both post and pre-facto) to the Senate decision to propose a law for all out trade warfare with China. Now we know - in the week ended October 12, a further $17.7 billion was "removed" from the Fed's custodial Treasury account, meaning that someone, somewhere is very displeased with US paper, and, far more importantly, what it represents, and wants to make their displeasure heard loud and clear. Whether it is China - we do not know: we may have a better view in two months when the September/October TIC data hits, but even then it will be full of errors, as Direct Bidder purchases by the UK usually end up being assigned to China at the yearly TIC audit. And the sellers know this all too well. What they also know is that over the next few days (or weeks - ZH tends to be a little "aggressive" in its estimates for popular uptake), as soon as the broader population understands what has transpired, concerns about the reserve status of the greenback will start to resurface, precisely as many have been warning. And what has happened is that in six consecutive weeks, foreigners have sold $74 billion, or more government bonds in a sequential period of time than ever before.

So... perhaps it is time to reevaluate US intentions for a trade war with any of its "evil" mercantilist, UST-recycling partners. Unless, of course, they want $74 billion to become $740 billion, and to force the Fed to have no choice but to intervene, only this time not with a duration sterilized procedure, but one where the Fed has to buy everything that China et al are selling.

On the other hand, judging by the traditional reaction of various precious metals to this kind of fiat suicide, perhaps it is not such a bad idea after all...

Total holdings in the Fed's Treasury custodial account and weekly change:

Trailing 6 Week Cumulative Total of custodial account Treasury flows.

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CClarity's picture

Uh-oh.  What if the black swan is not the well telegraphed EU crisis.

What if it's Asia.  Where China's growth is slowing (imports and exports less already) and then BANG - flooding in Thailand, Vietnam, Philippines which are less able to afford natural disasters (or man-made ones) than Japan, and very dependent on their wagon being hitched to China's growth machine.  Just sayin . . . 

tim73's picture

Real floods in Asia cause liquidity crisis in the US and EU. That is poetic.

CClarity's picture

Nice connect!

Ala "Let them eat rice CAKE" even though rice crop is being wiped out.  Who will rally?  India? Russia short on grains. Japan can't help.  Australia? Maybe.

Threeggg's picture

"Let them eat plastic rice CAKE"


There..............fixed it for're welcome

DCFusor's picture

A black swan, by definition, isn't well telegraphed, it's what you never thought could happen.  No matter how bad Yurp gets, we know where it's going - so it can't be a black swan, just a really nasty normal swan.

Whether your other senario is the one, I couldn't say.  Possible.  It's prudent to plan for the unexpected.

It's mostly whiney losers who say things like "well, can't pay the rent because the car unexpectedly broke down, or the kid got sick".  Shit happens, all the time, and to everyone.  It's calling yourself stupid to say you don't know that and didn't plan for a little bit of shit to happen.

Prometheus418's picture

As usual, you're mostly right, DC- 

I'm only replying to remind you not to harden your heart entirely.  While it's easy to sit up on the top of a hill and cast down your judgement, it's important to remember that breaking the bias you have been imbued with since birth is not something that most people can do- and even those of us that do it are left with remnants.

Some things just can't be planned for, and I suspect you know this.  That is where compassion, rather than a fist, is called for.  If we forget that, there isn't anything worth fighting for.  I spend a lot of my time these days extending a friendly hand to those whose past behavior is objectively repugnant to me, in the hopes that they have seen the errors of their ways.   Sometimes that charity clamps down on me until teeth hit bone, but the times when it wakes up another soul makes those missteps worthwhile.

One good lieutenant is worth taking a beating from a whole pack of wolves for- it's worth nothing to live alone on a mountain of gold, and you know that.

Snidley Whipsnae's picture

No good deed goes unpunished...

that is an old saw and a comment on human nature... just the way life usually turns out.

Smiddywesson's picture

A black swan, by definition, isn't well telegraphed, it's what you never thought could happen.  No matter how bad Yurp gets, we know where it's going - so it can't be a black swan, just a really nasty normal swan.

No.  That's just theory.  Taleb himself admits that in practice there are always winners who saw it coming.   China dumping treasuries, gold rocketing to the moon, and the failure of the USD are black swans to most, and yet these events will not come as a surprise to anyone on this site.

You also might want to consider from your lofty perch that a lot of people who you call "whiny losers" are really victims of a society that educated them on the life of Harriet Tubman rather than provide them with any education on finance and money.  That goes for their parents too.  This society has done everything to impoverish them and despite working hard with two incomes a lot of people are living on the edge of survival.  Did they create inflation?  Did they bust the housing market?  Did they create the tax system, or the banking fees, or the hidden taxes on their cell phones?  How about health care, you know, the primary cause of bankruptcy? 

Putting moral labels on people for being unable to wisely handle money is like laughing at a little kid because he can't ride a bike.  Most people can't handle money wisely.  That's the way it is, that's the way it always has been.  People who do so think they are smarter or better than most, and maybe they are, but they should also consider that this moral labeling of the poor is a tool used by TPTB to coax useful idiots into supporting TPTB.

Janice's picture

Jesus was the Jew who supported the Biblical teaching that the love of money is the root of all evil. If you consider this concept on a very deep level, I have found that it holds true for virtually every offense except crimes against persons, such as, rape. All other social injustices can be condensed to the love of money. Sorry folks, just a rant.

kito's picture

So that's why gold is down as of now

ffart's picture

I thought it was the love of money for money's sake. 

delacroix's picture

the love of other peoples money

Bananamerican's picture

stomach-money-power-Power over another man's stomach...

Ahmeexnal's picture

money is the root of all evil

Francisco D'Anconia was wise in advising anyone who cared to learn from him to run away from fools like you.


Money is only a tool. It's POWER what's at the root.  And when money goes to zero, like it will in a few days time...power comes from the barrel of a gun.

Dingleberry's picture

You're the fool. Big pharma doesn't push useless drugs for power. They do it for money. Lawyers don't oversharge their clients for power. They do it for money. Politicians don't take bribes for power. They do it for money. That's why when they leave governemnt they get money-making jobs afterwards. Pimps don't beat their whores for power. They do it for money. Lloyd, jamie, et al don't lie, cheat and steal from each other and everyone else for power. They do it for money. Money equals power, but power doesn't always equal money. EVERYONE WANTS MONEY....just like God said they would.

Phil Free's picture

Nay, is the same, for the money is traded for power.  More money = more power.

Raymond Reason's picture

Jesus, who many of us believe is God, speaks in truths alone, and men have spent centuries uncovering the layers of truth embedded in his every utterance.  The "root of evil" being one.  Money, real money, in other words gold, silver, non-perishable or at least long-lasting commodities are a store of value, and this is where the evil starts.  Hunter-gatherers entered the agrarian age and had something to save, protect, guard, insure, loan, transport, tax, and on it goes.  Money is a Pandora's box.  

Not saying Jesus was against money or civilization...He readily acknowledged the world is, by design an evil place.     

AustriAnnie's picture

Money, arising in a world of scarce resources, as a way of working for/storing/and obtaining those resources voluntarily through exchange.

The other option being by force.

When force is used to obtain money or control money, it is not money that is evil.  It is the fact that force is being used to control (here's where the power comes in) resources.

The world is evil because resources are scarce.  The world would be all rainbows and unicorns if money were not necessary to signal the value of resources because resources were abundant and unlimited.  However, resources are not.  Prices signal the subjective valuations of individuals and therefore control allocation of resources.  If someone steals your food, food is not evil.  The person who stole it is.  If someone steals that with which you buy food, money, then money is not evil.  Money is just a substitute for resources.  Resources are not evil.  Evil actions arise when goods are stolen.  It is the thief who is evil.

Money is the power that signals value in a market.  If not for money, pure force would be the way resources are obtained.  Which is more evil, then?

Bananamerican's picture

Jesus...readily acknowledged the world is, by design an evil place.

"love" of money, deceit, vanity, the 7 deadlies...all of it used to gain advantage in this world, this transitory Life which passes away...

A Christian was warned (before "Prosperity Evangelism" anyway) to "Keep your eyes on the Prize"...

"I am but a Stranger Here. Heaven is my home"

Prometheus418's picture

Power never comes from a barrel of a gun.

Power is what makes those whose lives are expendible to the powerful pick up those guns.  Power comes from the mind, and it's ability to influence others.

Ahmeexnal's picture

Hey-Zeus == Choo Choo (from Top Cat).

Schmuck Raker's picture

What did he know?

When did he know it?!

DosZap's picture


Well he's either your Hispanic cook, or gardener, or your only ticket out of this world.

Take your choice.

Ahmeexnal's picture

he should offer more virgins in the afterlife than the other dude

Phil Free's picture

My gardener? (Ok, 'landscaping guy'.)

jdelano's picture

Just so some other jackass doesn't get the chance to say it,


jdelano's picture

Tee hee! That brings the count up to SIX idiots who were just dying to say it. So many of you abjectly uncreative herd-following ass hats, completely incapable of generating even so much as a single original thought--there you go zh, I've just discovered a fail-safe contrarian indicator : )

achmachat's picture

that is a lot of billions.
Wonder what it would look like in cash.

SystemsGuy's picture

Imagine a twinkie. Now imagine a twinkie ten miles long, growing at the rate of 1 cubic mile every thirty days or so. T'is truly an enormous amount of oil-based cream filling.

CrimsonAvenger's picture

I have GOT to remember not to come here when I've got the munchies.

seek's picture

He got to me. I happened to be stopping by the store after reading this, and I indeed acquired the lucious, golden spongecakes.

Got to enjoy them before they're no longer available and the remaining stock is eaten by post-financial-apocalypse zombies.

Phil Free's picture

Cue Carl Sagan from 'Cosmos', as he gestures at a star-filled night sky -- "..billy-ons and billy-ons.."

Bananamerican's picture

that was 1980 man...

"TRILL-ions of ephemeral bank notes Der-ifting through the interstellar gases"

lano1106's picture

IMO, it could be bearish for equities. If the massive bond selloff is problematic for the US TPTB then they could create a beautifull flash crash in equities to shit scare investors back into the US T-bond safe heaven.


Calmyourself's picture

umm, who are these investors and why are they so stupid?

RobotTrader's picture



Then who is buying these Uncle Gorilla notes hand over fist, driving yields on the long end of the curve down to 50-year lows?

Must be Uncle Gorilla himself.

Don't they call that "cannibalisim"??


nope-1004's picture

No, the correct name is Ponzinomics.  Liar Ben is head of the department.


Phil Free's picture

Ponzinomics -- That's a good one.. Will have to remember.

SheepDog-One's picture

Gee Robo maybe its like Ive been telling you for months replying to your wild-eyed posts about how great bonds are....when youre getting new credit cards to pay on your other maxed out ones, youre fucked.

dark pools of soros's picture

not really..   he who spends the most wins,  not he who pays the most back -   eventually one oz of gold will pay off all your debts so why do you NOT want to spend as much fiat credit as possible??

Phil Free's picture

He who dies with the most toys wins.

spinone's picture

Once the fed starts buying treasuries, it will have to buy them all.

Peterpaul's picture

It is Ouroboros, chomping on his own tail...

Phil Free's picture

Also spelled -- Uroborus.  Add an E -- EUroborus?   ..... Co-incidence, or more?  You be the judge.