Safe Haven? Record Dump Of US Treasurys By Non-Central Bank Foreigners In June

Tyler Durden's picture

There was little to smile about in today's Treasury International Capital data for June (as always 2 months delayed). As usual the press release was chock full of irrelevant gross level data, so here is the bottom line. The good news: despite all the posturing China, continued to buy Treasurys, with its total increaseing from $1160 billion to $1165.5 billion. The bad news: China was more or less the only one buying, as total LT Treasury activity saw a net sale of $4.5 billion in June: the first net sale of US paper since May 2009, and only the third time we have seen a net sale of US paper since the start of the Second Great Depression (the third time being, paradoxically, just after the bankruptcy of Lehman, see chart below). The bad news gets downright ugly when digging into the foreign transactions. As is well known, total foreign purchases (or sales as the case may be) consist of central bank transactions, as well as those by non-monetary authorities, i.e., retail and institutionals. And here is where we get today's record: at $18.3 billion in total non-central bank sales, this was the biggest one month sale of US Treasurys in history! Luckily, in keeping with the maintenance of the optics of the global ponzi, this was buffered by central bank purchases of $13.8 billion. With everyone needing someone else to buy their debt we wonder just how much longer, everyone will be able to buy everyone else's debt, even as sales are bound to increase month after month. And the last really ugly news (for ponzi'ists): while China may be posturing, Russia is doing anything but: its holdings have plunged to a fresh multi-year low after Putin gave the green light to dump another $5 billion in US paper, bringing Russia's total to just $110 billion, a 38% drop from the $176 billion in October.  A little birdie tells us gold is the primary beneficiary of this asset roll over.

Total foreign monthly transactions across all asset classes:

Recent changes in top holders of US debt:

A focus only on Treasurys:

A split of UST transactions between official institutions and "everyone else" - take our word for it: the red on the bottom right is a record.

And lastly: the "evil empire" which continues to sell the "crumbling empire" and buy gold:

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No Bid's picture

Please forward to Joe  W @ Business Insider [a business humor website].

Biggvs's picture

Yet treasury prices spike up in August after the ratings downgrade. Go figure.

EscapeKey's picture

Santa Claus is still buying. And I hear the tooth fairy need yield to make payments to children.

Sudden Debt's picture

That's because they are old school. To bad a lot of children will be dissapointed when they find bonds in the socks this year....


Dr. Engali's picture

Retail made a quick jump out of the market and into money market funds. That is why you had a big move in treasuries.

Biggvs's picture

The 10yr and 30yrs spiked as well, not just short term paper. But agreed - the dump in equities certainly helped.

SheepDog-One's picture

Wow if all we've got left is dump stocks to give a momentary boost to treasuries and vice versa, we're in some deep kimchee.

IQ 145's picture

The ratings downgrade appeared to have no effect on the treasuries markets. There's no measurable meaningful l statistical correlation. This is the pronouncement of Mr. Market; Whether is it's right wrong or indifferent I don't know. Tyler is very bearish, of course; and that's his right. I'm pretty darn bearish too. I think you could sell the Long Bond Today as a short, but you better look at the chart yourself; it's a "weak" I think, from me.

SheepDog-One's picture

Im not trading anything that pays off in off-the-cliff dollars.

Forget dorky Treasuries anyway, lets get to the sexy stuff like QE3 that has been priced into these stupid markets about 40 times over now. Wheres the QE need?

Wheres the fear and panic? Everywhere I look all I see is big smiles on calm Hindu cow faces. All is well, bitchez.

Ricky Bobby's picture

Mr. Market? You mean institutions following price the control settings from the Politburo.

jimijon's picture

Help me nominate Charles Ponzi for the Nobel in Economics post humously.


IQ 145's picture

Treasury prices spike up because of the "flight to quality" which is related to the downwash in equities; eg. the money has to go somewhere. This is an extremely old and well understood thing.

SheepDog-One's picture

Downwash in equities? What, 3% or so? Big deal.

scatterbrains's picture

well yea that 3% reflects on those humans that were still in the market at that point.  Now it's off to the races whether the humans participate or not.. or so says the dollar anyway.

boiltherich's picture

3% of a 24 trillion market cap is a big deal.  It is almost as large as the first big bank bailout. 

EscapeKey's picture

Right, and today where equities go up and bond yields stay static? Or does this rule only work one way?

SheepDog-One's picture

Sure, apparently the trick is people have only 2 places to 'invest', stocks or bonds, and BOTH can be raised by alternately chasing people from 1 into the other, and vice versa....kind of like spinning cotton fibers into gold I guess.

SheepDog-One's picture

So POMO really was just payoff bankers while they sell their UST's. So now what?

LongBallsShortBrains's picture

Selling more 30yr at these levels. ...... Ballsy or brainy?

Biggvs's picture

Ballsy since the yield went all the way down to 3.5% when the market swooned. I'll bet it swoons again soon. Dead cat bounce in the S&P 500 of 9% and counting.

Boston's picture


What triggered your trade?

Btw, I'm looking for shorting (10 year) opportunities (after being long for 6 months, and now flat).  While tempting, my analysis says it's still to early to short.

LongBallsShortBrains's picture

I flipped a silver eagle and a platinum eagle. Both came up tails. Time to sell. Kept the gold eagles hidden in case they become "illegal" to hold.

Joking aside. The runup in the 30 triggered it. Decided to short a while ago if they hit 137.75. Only sold a few Will load the boat short at 142.75. And the truck at 147.75. Don't know where to puke them if wrong. But I am learning and watching close. It's money I can lose. Hope the deflation shit is temporary Long silver gold and platinum. All physical. Long 30.06. Long land, chickens, turkeys, ganja Short brains and trust in the .gov. ( and brains too)

boiltherich's picture

Bout time we had equality in the anatomical avatars.  I would have posted mine long ago but they won't both fit on a 40X40 pixel photo.  Now if you could just get them to jiggle up and down, or better yet helicopter them. 

LongBallsShortBrains's picture

Mine wouldn't fit either. Admit I lifted them from google images. I thought about making an animated gif to helicopter them, but since they are not mine, I figured I would leave them alone...... Wouldn't like to find out I was playing with somebody else's sack.... I might like it. Then I wouldn't know what to do.

Robslob's picture

Another downgrade will come from some rating agency per instruction of the U.S. Government when more foreigners again sell treasuries and the U.S. needs locals to buy more crap therefore containing all the crap in one country.

When each country then gets all their own to bring their money home the final chapter can begin...a new one will begin with gold.

DosZap's picture

Robslob @ 10:36,

Well 12 Trillion in actual PRINTED USD's would be a hell of a long time coming home.

Only approx a third of all currency is in the USA, or in Americans hands.

JW n FL's picture

China Trades Renminbi with 1,200% (at least) Leverage.. for Treasuries that have 120% Leverage..

the rational is that China can Service their Debt? by building empty Cities?

America is again being ripped off and ALL the Sheep can say is China is going to own U.S.?


the shear level of stupid is fucking stupefying!

SheepDog-One's picture

China is no better off or smarter...theyre just a more brutal dictatorship, for the moment.

Mountainview's picture

But they don't owe a dime to the US.

Cdad's picture

Exactly, Dog.  And I suspect, as usual, they are the morons buying Euro dollars as if they are a screaming buy...exactly ahead of further revelations that it will be the currency that fails first.

This market is so stupid...stupid as a criminal syndicate Wall Street banker, you might say.  Dumb as a BlowHorn anchor person.


SheepDog-One's picture

Im focused on this Jacksons Kornholing event or whatever its called where all the banksters gather....wheres the need for QE? All I see is market euphoria! A couple weeks ago it looked like 'Uh oh, here they go setting up for a BIG market apparently not just a few hundred points now with todays +200 and Fridays +500....with days like that wheres the panicked bleats for help from the sheeple!

Well anyway Im buying some Vaseline stock before this bankster 'Jackson Kornhole' event whatever it is, sounds like a terrible place to be.

HellFish's picture

Jackson Hole.  Ahhh to have a JDAM...

Cdad's picture

The ZH brotherhood should have planned a gathering there this year.  Wyoming is a great place to be in the summer, and the protesting would have been fun.  

As for what they can do with that meeting...I rather think it is pretty close to nothing, Dog.

Ricky Bobby's picture

Sheep-  Don't forget to mention the Middle kingdom's 500 million slaves. Damn the rest of the world's elite are just envious.

silvertrain's picture

dont the fed themselves own the most? If thats the case then one would assume that they also control it..

monopoly's picture

Writing is on the wall and Russia is reading it correctly. China will too, just be patient. It will all come together for us.

HungrySeagull's picture

Russia right now sits on such riches as may be found in resources. They don't need paper to make money.

Ranger4564's picture

You want safe haven, may I suggest you look at this?

There is a more significant message in that article and it's not about safes.


Absinthe Minded's picture

I don't know about spending six months in a vault with people I don't know. What happens when you get a group of 20 or so who decide they are going to snuff a couple out quietly every night to make the food last longer than the six months, just in case. I could see mass chaos and paranoia turning that vault into a cage match that would make the Apocalypse look mild.

Ranger4564's picture

Yes, but knowing the probabilities, you could play along like you would enter the vault with them, place a video camera in there, then sell television rights, become a filthy rich producer or something, and forget about the cage, except that there are 20 or so people in there making you a lot of money.  Of course, you come up with some excuse not to enter the cage, just before the need arises, so you can be outside watching the chaos.

Or, you could just put your jewels in there and no one needs to die. 

Your choice.  Either way, you come out on top.  Cool alias by the way... and nice avatar also.  You think you'll need all those 9 lives?

SheepDog-One's picture

Everyone forget about QE3, which has been driving markets for the last 6 months? Wheres the need for QE3 at all, with the DOW comfortably popping +200 every open?

All is well, no QE....well unless theres some HUGE event planned to cause sudden fear and panic and begging for QE because right now theres nothing but total Hindu cow calm out there.

Everybodys All American's picture

QE3 and more treasury purchases is virtually a given unless of course the market continues down as fear grips all.

SheepDog-One's picture

What? So now QE case is made based upon 'all is well'? Wheres the need for it, if in 5 hours of trading the DOW can climb +700 points? 

QE? Where and why?

Everybodys All American's picture

It is simply a supply and demand issue. The demand on US Treasuries can only be completed if the Fed is the major buyer. Otherwise expect failed auctions or higher rates.

SheepDog-One's picture

LOL, 'supply and demand' and mad scramble for .01%...yea really awesome man. The FED is the #1 buyer of their own debt....uh huh lets see how long that can roll on for.

AnAnonymous's picture

Good one. So China, that was touted as one of the first rats to flee the US boat, is still on deck, pushing at the wheel to maintain the US world order.

Meanwhile, all the longtime allies no longer show such a dedication.

How to interpret it in a US citizen way?

"China wants the destruction of the US, they hate on us. They are not our friends. They want global hegemony"

"Our lifetime friends and allies are under Muslim, negro dominion, as shown by the evidence they refuse to help us"

Welcome to the US world order, a world order in which the US middle class is bled to death to support the rest of the world.

RobotTrader's picture

With the 5-yr. yield still at 0.96% I doubt anybody is seriously worried.....

Uncle Gorilla is enjoying a once in a lifetime opportunity of rolling over short term debt at near zero cost.

And 5-yr. at under 1% must be a total bonanza for the Treasury Dept.

SheepDog-One's picture

Right! No ones worried about anything! Theyve magically discovered that you can just 'roll' your debt at 0%, and fully fund everything, its a fuckin miracle really!  In fact I just heard Obama is changing the name of the country to 'Glitter Rainbow and Loilipop Land'!

topcallingtroll's picture

Compared to the rest of the world we are lolipop land, sheepdog.

You should travel and get out more.