Saudis, China Dump Treasuries; Foreign Central Banks Liquidate A Record $346 Billion In US Paper


One month ago, when we last looked at the Fed’s update of Treasuries held in custody, we noted something troubling: the number dropped sharply, declining by over $27.5 billion in one week, the biggest weekly drop since January 2015, pushing the total amount of custodial paper to $2.83 trillion, the lowest since 2012. One month later, we refresh this chart and find that in the latest weekly update, foreign central banks continued their relentless liquidation of US paper held in the Fed’s custody account, which tumbled by another $22.3 billion in the past week, pushing the total amount of custodial paper to $2.805 trillion, another fresh post-2012 low.

Then today, in addition to the Fed’s custody data, we also got the latest monthly Treasury International Capital data, which showed that the troubling trend presented last one month ago, has accelerated. Recall that a month ago,  we reported that in the latest 12 months we have observed a not so stealthy, in fact quite massive $343 billion in Treasury selling by foreign central banks in the period July 2015- July 2016, something truly unprecedented in size and scope.
Fast forward to today when in the latest monthly update, that of July, we find that what until a month ago was “merely” a record $343 billion in offshore central bank sales in the LTM period ending July 30, one month later this number has risen to a new all time high $346.4 billion, or well over a third of a trillion in Treasuries sold in the past 12 months….. [read more]
Another article: China Holdings of U.S. Treasuries Drop to Almost Four-Year Low

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