Foreigners Dump Record Amount Of US Treasurys In Past Month

Tyler Durden's picture

With year end fund flows making absolutely no sense for the most part, thank you global central planning, as the euro plunges and the market refuses to follow, with risk assets rising on speculation the ECB (and/or Fed) are about to restart printing yet gold collapsing (on one or two hedge funds liquidating, yet econ PhDs already rewriting their theses on why the "gold bubble has popped"), and finally with Treasurys soaring to near all time highs (10 Year under 1.9% yesterday even as stocks surged on data from the National Advertisers of Realtors, aka NAR, of all fraudulent and corrupt entities), here is the latest observation to make the confusion complete. As the Fed's critical H.4.1 weekly update shows (which is leaps and bounds more accurate than the Treasury's TIC international fund flow data), in the week ended December 28, foreign investors sold the second highest amount of  US bonds in history, or $23 billion, bringing total UST custodial holdings to $2.67 trillion, a level first crossed to the upside back in April. This number peaked at $2.75 trillion in mid-August, and as the chart below shows the foreign holdings of US paper have been virtually flat in all of 2011, something which is in stark contrast with what the price of the 10 Year would indicate vis-a-vis investor demand. And going back further, the last week is merely the latest in a series of Custodial account outflows. In fact, in the last month (trailing 4 weeks), foreigners have sold a record $69 billion in US paper, a monthly outflow that was approached only once - in the aftermath of the US downgrade (when erroneously it is said that a surge in demand for US paper pushed rates lower - obviously as the chart shows nothing could be further from the truth).

So here is the conundrum for today: did China continue to dump US paper in the year end, something we saw started with the October TIC data, or was it French banks continuing to sell off any non-EUR assets, and in the process repatriate proceeds, keeping the EUR higher. We don't know, nor frankly, in this uber-centrally p(l)anned market, do we care much any longer.

Chart 1 - total UST holdings in Fed custody:

Chart 2 - monthly (trailing 4 week) change in UST holdings:

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kaiten's picture

More like: QE3, bitchez!

LawsofPhysics's picture

Wake the fuck up, QE has never stopped.

kridkrid's picture

Bingo.  QE1 and QE2 are a lot like TARP.  It's the red herring about which people can focus their attention while the real work takes place.

SheepDog-One's picture

Theyre done with 'QE', now they just have the spigot flowing full force all the time, UNLIMITED FED Euro swap line, therefore it HAS to be the same to Wall St and the banks. 

Snidley Whipsnae's picture

Right you are SD1... and the sheeple are told 'Use This Paper Or Else'!!!

Happy New Year

DaveyJones's picture

fools, it's obviously an act of terrorism

ratso's picture

Could it just be more repatriation of euros and profit taking??

VegasRage's picture

I can't help but think that the nearly $250 trillion in derivatives markets on the OCC's books are the new stealth QE instruments. 

Hugh_Jorgan's picture

The problem is that full blast is providing less effect than the measured flows of 12 months ago. The can moves less and less with each successive kick.

mick_richfield's picture

Things fall apart

The center cannot hold.

Mere anarchy is loosed upon the world.

Seize Mars's picture

Things fall apart

The center cannot hold.

Mere anarchy is loosed upon the world.

Yeats - well done.

hannah's picture

fall apart things do

hold The center cannot

upon the world Mere anarchy loosed


philipat's picture

And MASSIVE QE from ECB also. So why is Gold down? More manipulation like the sudden miraculous huge increase in Oil reserves at a time when US prop ahead of the Iran war was pushing up oil prices and which was, inconvenient? In the case of Gold, it would, of course, also be inconvenient should China stop buying Green in favour of the shiney stuff?

Hansel's picture

Part of gold's smash has to be John Paulson liquidating some of his funds for redemption requests.  He's down >50% this year -- not in his gold fund, but I don't think some investors will care which of his funds are up or down.

VegasRage's picture


That part of the puzzle is easy, the paper metals SLV, GLD, and the CME have been trading 500:1 paper to the physical. These markets trade more in a month than is physically produced in an entire year. There are huge short positions by JPM and HSBC out there plus when the Commex doesn't like the price they raise margin requirements kicking people out of their contracts.


It's no surprise they picked the slowest part of the year to attack the price again, I think EUR and liquidation of paper positions is causing this drop. But there is already a detachment between melt price and physical price, SLV which is supposed to truly reflect melt price of silver per ounce is trading significantly below silvers actual melt price. As of this writing SLV price is 27.53 and the actual melt price of silver is 28.33.

If SLV represents the actual physical metal, how is that possible? 


fnord88's picture

Having never bought paper I'm not sure how it works, but I know I havn't been able to buy physical over the holdidays. What better time to make gold look weak, than when nobody is actually able to buy any?

topshelfstuff's picture


You two [ Kirdkrid & LawsOfPhysics ] said it perfectly


""""Wake the fuck up, QE has never stopped....""""


"""It's the red herring about which people can focus their attention while the real work takes place.""""


Its like the way a Magician is trained and works on stage. Its all about getting the People to look at one hand, while its the other hand making the Move. Though its right there in front of the audience, it works, its human nature, a natural reaction that they know about and the one they are exploiting.


Still, to this day, with the assistance of the MSMedia that hasn't allowed any follow-up, we learned that some $16 TRILLION was Secretly dispersed starting in late 2008, while the People [audience] were all focused on the $700-$800 BILLION that Paulson was waving in one hand.


That was like 20 QE's or TARP's done, while 1 was in the hand everyone was looking at.

Kaiser Sousa's picture

"Wake the fuck up, QE has never stopped...."

sho' you right!!!

Triple A's picture

so does that mean QE doesn't cause inflation unless QE was formally announced, also does it mean that instead of having gold and silver skyrocket it goes down even. Simply because they are not announcing it. If thats the case why would they ever announce it?

xela2200's picture

That is why you are seeing so much volatility in the Precious Metal market. The proof will be in the next few months. I see it as the battle between market and The powers That Be. Volatility is the lighting and thunder. I suspect that next year will see the mother of all volatility for PM.

Just look at gold and silver this year. I think they gave me an ulcer.

And about inflation --> Just go to the supermarket. Trust me it is NOT 3% or 4%.

xela2200's picture

I agree.

Lets see:

1- Foreigners Dumping treasuries - Interest rate up pressure

2 - National Debt increasing rapidly - interest rates up pressure

So we have selling combined with more issuance for government. How in heavens can interest rates be near zero? If not monetizing  the debt then I don't know what else it could be. Some wonder why the bond vigilantes haven't shown. Maybe, it is because they know the FED will squash them like bugs. The FED has no issues with monetizing the debt and they have signal the markets accordingly.

What I am having a hard time understanding why the strength of the Dollar? I know Euros are flocking to the dollar for safety, but why not hard assets (land, commodities, etc). All they seem to know how to do is buy each others' useless debt.


Oh regional Indian's picture

That last line really says it all. It hardly matters anymore, it's blatantly rigged.

Treat this as a carefully scripted drama. If you don't have the text, no way you can plan and play. Winnings are fool's luck for most winners not in.

Who did the dumping? It should be open, common knowledge, not coming out in some report months after the fact.

Enjoy the last days of 2011 fellow ZHers. Next year is for reals!!!




disabledvet's picture

The Tylers speak with forked tongue here and they know it. How about offering up an explanation instead of leaving it to The Commentariat? "What?" you say? And "give everyone the answer you already know?" Well wouldn't that spoil the New Years! Obviously the answer must be once the USA is downgraded the commercial banks are forced to buy what Robot Trader called perfectly "Uncle Gorilla Paper." Sure...angry sovereigns like "the country formerly known as China" have ordered the deployment of "the sell at the high so we can buy at the higher" weapon. That is their prerogative. I would not recommend that approach however.

gatorengineer's picture

one of the worst stories ever on ZH.........  Eurobanks needed capital, selling Tbills no surprise.....  with LTRO watch for foreign ownership to soar as its an easy euroshort play.....  

LongBallsShortBrains's picture

I think the news in this story is that the gorilla paper was being sold in record amounts and still going up or, at least, not dropping, implying that the invisible hand is buying.

My take anyway

Happy new years to all the hedgies. What a great site!!!!

tim73's picture

Are T-bonds biodegradable matter? Is it safe to wipe your behind with it? No rash? How about using one as a diaper for baby?

Snidley Whipsnae's picture

Perhaps they are edible?

If so, the Brits need them since "Burglaries in the UK have doubled in 2011, doubled from the previous year. Theft of cattle and sheep has increased 2.7 times between 2010 and 2011. These are just are just small indications before anything has started to happen. People are poor, people are hungry.

This is just an early indication of what will happen in the next few years. People will have no money, people will be hungry, and therefore they will fight to get money, they will fight to get food. Sadly, we will have, in most countries, in European as well as the US, we will have serious social unrest. How far that will go is impossible to tell, but I am concerned.”$3,000_-_$5,000_in_2012.html


Ghordius's picture

"Theft of cattle and sheep has increased 2.7 times"

Borderers! Reavers! Quick, deploy the regiments to the Scottish Border!

ok, ok, bad taste, my excuses

Snidley Whipsnae's picture

Haggis bitchez... can't find a brand on a plate of steaming haggis!

Ghordius's picture

haggis? the original recipy for CDO's?

Re: "we will have serious social unrest" - please remember that on this site we hear a lot of non-UK-Europe being hoplessly "socialist" - this includes social spending so that people do not get hungry and start to steal cattle and sheep - something the typical urban poor is not really equipped to do...

Snidley Whipsnae's picture

"urban poor", motivated by hunger, can accomplish a hell of a lot more than most would believe.

Nothing like a lack of fish and chips to get folks off their asses.

Ghordius's picture

still not convinced - you need some capital (skills and means) to go out of the city, find sheep, kill them, eat them

cattle is even worse - you might love filet mignon but butchery needs space and equipment, you can't roast a calf like a marshmellow on your camp fire

much easier for the real poor to keep on their couches and waiting for what Brits call "the dole"

Snidley Whipsnae's picture

England = nation of shopkeepers.

How many butcher shops do you reckon are in GB?

How many people in France knew how to make a guillotine?

Hunger = The Motivator

Loose Caboose's picture

Holodomor - looked it up.  I had no idea. There are large holes in my education, obviously.  That's what I love about ZH - I learn something new every day.  1932-33 isn't that long ago.  Just incredible.

LongBallsShortBrains's picture

......How many people in France knew how to make a guillotine?

Very good point!

Cathartes Aura's picture

Britain is also a nation of street markets, and "wot fell off t'lorry" often gets traded hand-to-hand - and once those "themed" pubs get a reality make-over, there will be whispered trades at the bar as well. . .

creative survival. . .

Urban Redneck's picture

The last time I was driving thrugh DC at night I came across more deer than I usually see on my back porch in the back woods of Appalachia.  When the deer disappear from DC despite its government sponsored full employment and ban on firearms- then chaos will soon finally reach the Capitol.

YBNguy's picture

I hated DC and NOVA, Im so glad I moved an hour south. Talk about resistence to integrate and rampant illegals loitering outside the 7-11 (under the 'no loitering' signs that got me and my friends removed many times when I was younger, yet does not seem to apply to the aliens...). One block was all spanish (mexican) apts. with their own shopping centers all in Spanish, next was the Middle-eastern section with similar communities and stores in only Arabic, then the Koreans, followed by the Vietnamese, you get the picture...

swani's picture

That's why NOVA has such good food. 

disabledvet's picture

France will vote Socialism/Statism in the New Year...and it will be the smartest thing they have done since putting...was it Fouchet? charge during WW I. And trust me when I tell you: you have not heard the last of Dominque Strauss Kahn. Ideally he'd be the EU's Defense Minister.

Potemkin Village Idiot's picture

Haggis.... Now that's some good shit there!

Snidley Whipsnae's picture

PV... Not on every site can one read about the effects of haggis on the economy of a soverign! Be thankful you have ZH... if only for entertainment... but we know it's much more.

Happy New Year to You and All that Frequent ZH... excluding the trolls of course.