China Dumps Treasurys As Foreigners Buy Near Record Stocks

Recent concerns about a Chinese liquidation of its Treasury holdings in advance of, or in response to, a trade war appeared to have been greatly exaggerated one month ago, because according to the Treasury International Capital data from one month ago, China had actually added $8.3 Billion to its holdings in December, bringing the total to $1184.9BN, $26 billion more than a year ago. Meanwhile, we reported  that the real seller was Japan, which dumped $22.6 billion in TSYs, bringing its total to just over $1.061 trillion, the lowest since the start of 2012.

Fast forward to today when the "China is liquidating treasurys" narrative is set for a comeback, because according to the latest just released TIC data, in the first month of 2018, Chinese Treasury holdings declined by $16.7 billion (a number which recall is price adjusted), to $1.168 trillion, the lowest since July of 2017 and the biggest monthly drop since September.

Meanwhile, Japan's liquidation appears to have been put on hold, as the land of the rising sun added $4.3 billion, bringing its new total to $1.066 trillion.

Other notable holders were mixed:

  • Russia sold $5.3BN to $96.9BN
  • The United Kingdom sold $6.7BN to $243.3BN
  • Belgium, i.e. the proxy for China and other anonymous buyers, rose by $4.5BN to $123.7BN
  • Cayman Islands, i.e. hedge funds, shed some $3.9BN to $241.9BN

The good news for all the recent 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 January, foreign public and private entities bought a total of $8.4BN in Treasurys while adding $22.5BN in Agencies; they also sold a modest $2.2 BN in corporate bonds.

But the biggest surprise - for the second month in a row - was the surge in US stock purchases by public and private foreign entities, which in January amounted to a whopping $34.5 billion (of which official entities bought $952MM while private entities bought $33.5BN), 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 start of 2018: furious buying of US stocks by foreigners in January of 2018.... a trend which however ended with a bang just 5 days later when the February 5 volocaust crushed all countless human and robotic momentum chasers.

Comments

JackHydrazine DEMIZEN Fri, 03/16/2018 - 11:43 Permalink

"That's an alert, level five, indicating a temporal collision. It like two Tardises have merged, but there's definitely only one Tardis present. It's like two time zones or more at the heart of the Tardis. That's a paradox that could blow a hole in the space time continuum the size of. Well, actually, the exact size of Belgium. That's a bit undramatic, isn't it? Belgium?"

"This is bad. Two minutes to Belgium!"

-"Time Crash" Doctor Who (Nov. 2007)

In reply to by DEMIZEN

Stormtrooper Thu, 03/15/2018 - 16:33 Permalink

Let's issue trillions of these worthless treasuries to these suckas while they're doing "Stupid".  US can then do a "gold drop" on its citizens with the income, knowing that the treasuries will never be paid back.

At least we would have some real money to survive on when the SHTF.

BandGap Thu, 03/15/2018 - 16:40 Permalink

Sort of off topic - I have been looking to add to the household pistol collection and noted a lot of them are sold out. Anyone else notice that?

Just wondering.

east of eden Thu, 03/15/2018 - 16:51 Permalink

So who the fuck are these 'foreigners'? The BOJ? Probably not. The SNB? They already own 75% of their GDP in US stock (god help them).

So, the idea that foreigners have trillions of dollars to spend on highly speculative, US Junk Debt, is a stretch, and probably a big fat lie.

InnVestuhrr Thu, 03/15/2018 - 16:54 Permalink

Massively over-hyped pseudo-problem, because the FED and other central banks will buy US treasuries if China does not

PLUS

If FED buys the US treasuries, then the interest paid on them goes back into the US Treasury instead of to China for them to use for their benefit, eg conquering territory and building war bases :-))

Maestro Maestro Thu, 03/15/2018 - 19:05 Permalink

China isn't dumping US Treasuries.

 

The author and the rest of them are lying.

 

For how many years these Talmudic mind-fuckers have been telling you that Putin was going to nationalize the Rothschild-owned Russian central bank?

More than a decade by now?  Read and weep: http://new.euro-med.dk/20141215-putins-confident-putin-to-nationalize-r…

 

All lies, nothing but lies.

 

March 26, the Chinese petroyuan, right?

 

Lies and more lies.

 

Just like the Shanghai Gold Exchange which turned out to be just another paper scam like the COMEX.

 

Gold down 15 bucks by end of day March 26.