Wednesday, February 15, 2012

Stop children, what's that sound?... everyone look what's going down.

Back in June of 2011 I posted about the fact that the rush out of US Treasury's was intensifying with confirmation that Russia was dumping Treasury's.  This had come on the heels of a previous post in May 2011 which outlined how China was proposing to dump $2 Trillion of US Treasury's.

Last month we asked if a US dollar dump was underway. 

The thrust of that January post was that observers of the Federal Reserve's Custodial Treasury account had noted that there has been a continued, weekly selloff of US Treasury's going on.

The start of the New Year had brought six consecutive weeks in which foreigners had sold off government bonds, a sequential time period of selloffs which has been greater than ever before... meaning that someone, somewhere was very displeased with US paper.

Today the blog Zero Hedge follows up on this issue by noting that the latest Federal Reserve Custodial Treasury Report is out and the sell off continues.

Russia is now in it's 14th consecutive month of Treasury dumping as it's total US Treasury holdings declined to a fresh multi-year low of $88.4 billion. This is half of the $176 billion they held in October 2010.

Meanwhile the dumping of US paper by China also continues. China sold $32 billion in US bonds in December, bringing its total to a new post 2010 low of $1100.7 billion. 

The vastness of US dollar debt issued in Treasury's tends to dwarf the significance of all this. In December the grand total of US Treasury holding by foreigners declined from $4.75 Trillion to $4.732 Trillion. But don't be fooled... it is a significant amount and the clear pattern of the gradual selloff is now unmistakeable.

More importantly, as Zero Hedge notes, ask yourself the crucial question: "just what are China and Russia buying (ahem stockpiling) with all the dollars that are not recycled back into Treasurys?"

Does it take a rocket scientist to see what is going on? (Non-rocket scientist's can click here, here and here).


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