Foreigners slashed US Treasury buying by record amount?

Discussion in 'Economics' started by misterno, Aug 15, 2011.

  1. If so how come we don't see interest rates jumped?

    What am I missing here?

    WASHINGTON—Foreign investors cut their holdings of U.S. Treasurys by a record amount in June as the U.S. debt ceiling debate intensified, although China boosted its holdings for the third month in a row.

    Private foreign net purchases of long-term Treasury bonds and notes fell by $18.3 billion in June, following a $16.4 billion increase in May, according to the monthly Treasury International Capital report, known as TIC. The previous record drop was set in June 2000, when they fell by $16.5 billion.

    The extended political fight to raise the debt ceiling and the subsequent downgrade of U.S. credit ratings by Standard & Poor's has raised some concern abroad about the ability of Washington to pay its obligations. A Chinese government researcher last week urged the country to diversify its foreign-exchange holdings.

    China's holdings rose by $5.7 billion to $1.166 trillion in June, following net buying of $7.3 billion in May. However, analysts caution the data may not reflect the full spectrum of China's activity in the market. Treasury recently adjusted its estimate of China's holdings based on use of proxies in other countries.

    Japan, meanwhile, was a net seller of Treasurys. Japan remained the second-largest holder of Treasurys, but cut its holdings to $911 billion from $912.4 billion in May.
  2. Tsing Tao

    Tsing Tao

  3. Any serious replies?
  4. $18B drop in a $15T market doesn't strike me as...all that catastrophic...
  5. In his own way, I think he was being serious. Hint: Foreigners aren't the only ones buying up Treasuries...
  6. I don't think the S&P downgrade changed anything... it's still the same ol' bonds, only at a higher rate for the U.S... big woop... it's still the safest thing out there when compared to all the alternatives.
  7. LOL, that picture cracked me up.

    When the stock market sold off money went to treasuries as well. Although I think it mainly went to the short end of the IR-curve, but the whole curve will be affected. I'm no judge of how big this impact was.
  8. Due Buy

    Due Buy

    Let me use some mental math on that... yeah. Not catastrophic at all. Its only 0.0012% of the market.
  9. ==============
    Good points.

    Well downgraded, but remember all the oversize PIGS;
    where else to go ; gold & silver are not real liquid for size compared to stock or bonds.

    As if fundamentals ever had to make sense in short term:D?

    I wonder what would have happened, since Fitch Ratings was talking downgrade ALSO;
    but then later,strangly mumbled according to stats, 1 downgrade did not matter much................................................................

    If they keep spending money like drunken[non-budget] sailors;
    like the trader that smiled,shorted Citigroup stock said,,''fundamentals win in the end''.:)
  10. what happens if there is another downgrade?

    From AA+ to AA????
    #10     Aug 16, 2011