It's Not China That Is Dumping US Treasurys, It's Japan

Recent concerns about a liquidation by China of its US Treasury holdings appear to have been greatly exaggerated because according to the latest TIC data released at 4pm on Thursday, in December, China not only added $8.3 Billion to its holdings, bringing the total to $1184.9BN, or about $26 billion more than a year ago, but for the full year 2017, China added the most Treasury holdings going back seven years.

But while China appears content with its US paper inventory, it was the second largest foreign US creditor, Japan, that has been liquidating in recent months, and in December, Japan sold $22.6 billion in TSYs, bringing its total to $1,061.5BN, the lowest total since the start of 2012.

Other notable holders were mixed:

  • Russia sold $3.5BN to $102.2BN
  • The United Kingdom added $12.5BN to $250BN
  • Belgium, i.e. the proxy for China and other anonymous buyers, rose by $3.9BN to $119.2BN
  • Cayman Islands, i.e. hedge funds, also added some $2.5BN to $269.9BN

The good news for all these buyers of US debt is that thanks to Trump's budget, there's plenty more where that came from.

Looking at the broader universe of all US International capital transactions, in December, foreign public and private entities sold a total of $16BN in Treasurys while buying $16.4BN in Agencies; they also sold a modest $1.25 BN in corporate bonds.

But the biggest surprise was the surge in US stock purchases by public and private foreign entities, which in December amounted to a whopping $35.1 billion (of which official entities sold $5.3BN while private entities bought $40.3BN), the second highest monthly total on record, and smaller only compared to the record foreign buying in May 2007, when offshore entities bought a record $42 billion.

So in addition to buybacks, algos, CTAs, risk parities and a relentless retail bid, here is another reason for the tremendous equity meltup at the end of 2017: furious buying of US stocks by foreigners, a trend which will likely continue well into 2018.

Comments

fbazzrea IH8OBAMA Thu, 02/15/2018 - 17:07 Permalink

there's a high percentage of govt bonds with short duration. instead of locking in long-term low rates like other nations, OUR central banksters have been selling short-term to get the lowest rate possible NOW to delay any jurisprudence asserting itself in protest against a mushrooming national debt service, military adventurism and more wealth-redistributing stock buybacks.

there's no happy ending 

In reply to by IH8OBAMA

TeethVillage88s TeethVillage88s Thu, 02/15/2018 - 16:39 Permalink

 

http://www.treasury.gov/ticdata/Publish/shl2002r.pdf
http://www.treasury.gov/ticdata/Publish/shla2013r.pdf
(http://www.treasury.gov/ticdata/Publish/mfh.txt)
http://www.bea.gov/newsreleases/international/intinv/iip_glance.htm

Last Data is from January 2015.

Belgium 2002 = $10.8 B, then 2013 = $163 B, Today $354 B
Bermuda 2002 = $14 B, then 2013 = $94 B, Today ??
Cayman Islands 2002 = $10.7 B, then 2013 = $66 B, Today ??
Canada 2002 = $8.4 B, then 2013 = $46.6 B, Today $70 B
China 2002 = $95 B, then 2013 = $1,272 B, Today $1239 B

- Signed TeethVillage, Last Will and Testament

In reply to by TeethVillage88s

coast1 Thu, 02/15/2018 - 16:41 Permalink

I never heard of TIC data so I looked it up just briefly...Can TIC data be trusted?  Department of treasury?  I would not use this data as fact, but its whats used to make the world go around I guess..

Thordoom Thu, 02/15/2018 - 17:01 Permalink

Is the US going to instigate a new Pearl Harbor? Because this is attack on US  democracy  or how do they call it in DC nowadays. According to the new Nuclear doctrine this is attack on US interests. 

nuerocaster Thu, 02/15/2018 - 17:08 Permalink

Let me see how many times have I posted that people just about everywhere are facing rising risks from kleptocrats as well as let's call them classical gangsters.

The US has been the world's largest tax haven/money laundering location for how long?

Which of course brings up the unofficial numbers we can only guess at.

Consuelo Thu, 02/15/2018 - 17:23 Permalink

"The good news for all these buyers of US debt is that thanks to Trump's budget, there's plenty more where that came from."

 

Line of the day...

MusicIsYou Thu, 02/15/2018 - 17:33 Permalink

China's not dumping yet because they're invested in the U.S as a weapon against the U.S. China will wait until the U.S is knee deep in crisis, and then they'll dump U.S holdings. But China will dump eventually.

gdpetti MusicIsYou Thu, 02/15/2018 - 17:36 Permalink

Japan might be selling our crap to buy up their own crap. China might think that it can flip our crap into the new SDR basket they are pushing... so our share becomes partly their own... maybe Japan thinks this too, given their continued holdings of our crap, leaving only Russia willing to see the obvious need to get rid of any and all crap.

In reply to by MusicIsYou

Let it Go Thu, 02/15/2018 - 18:56 Permalink

A huge danger exists when we promote currencies to play an even larger role in trade wars. The dollars recent tumble has moved far past where many of us predicted, of course, much of this has to do with President Trumps rather unorthodox take on "Making America Great Again."

This was spurred on when U.S. Treasury Secretary Steven Mnuchin told reporters at the World Economic Forum in Davos that he endorsed the dollar’s decline as a benefit to the U.S. economy."

We cannot, of course, underestimate the important role currency valuations play in the global economy. The article below cautions about the danger of promoting currencies role in managing trade.

 http://Destroying The Dollar Is Not The Solution To Trade Issues.html

ds Thu, 02/15/2018 - 22:17 Permalink

BOJ has to sell Yen to absorb the sale of US Try. Who is going to buy the Yen in a global economy where CBs significantly influence the value of their fait currency ? A cheaper Yen does not augur well for Japan where the export model is passed and collapsing without the consumer base of US that has collapsed through debts.

 

 

 

 

Latirus Thu, 02/15/2018 - 23:47 Permalink

Let´s make more holes in another foreign country! We need to "democratize" more people faster! Let´s erase a couple of disturbing countries.

Easy rollover guaranteed...

Latirus Thu, 02/15/2018 - 23:47 Permalink

Let´s make more holes in another foreign country! We need to "democratize" more people faster! Let´s erase a couple of disturbing countries.

Easy rollover guaranteed...

KenilworthCookie Thu, 02/15/2018 - 23:47 Permalink

Japan might of finally re-grown a pair of balls and now might decide that a stronger yen,yes stronger yen short term might benefit them making uncle sugar make the first move to weaken the dollar more and play into their hand.