Foreign demand for US Treasury securities falls by record amount as China reduces holdings

AP Economics Writer, On Tuesday February 16, 2010, 9:58 am

WASHINGTON (AP) -- The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion.

The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits.

The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009.

The big drop in China's holdings meant that it lost the top spot in terms of foreign ownership of U.S. Treasuries, dropping to second place behind Japan.

Japan also reduced its holdings of U.S. Treasuries, cutting them by $11.5 billion to $768.8 billion in December, but that amount was still more than China's December total of $755.4 billion. READ MORE

http://finance.yahoo.com/news/Foreign-demand-for-Teasury-apf-1402391707.html?x=0&.v=6

John Galt | 1-3-6 Treasury Bill Alert: WOW!

By John Galt

January 10, 2010

Gang that is an unreal sight to behold but the 1-3-6 Treasuries which you know this site monitors persistently is telling us quite a bit:

DURATION……….YIELD

1 Month……………….. 0.01%

3 Month………………..0.03%

6 Month………………..0.13%**

**-Record LOW yield for this maturity.

With the surge in volume into the gold contract, massive drop in the US Dollar Index today and the ongoing rumblings about a second stimulus, health care bill and cap and trade legislative ideas being tossed about the USD is poised to tank as billions of dollars are reconfirming a concern about a return of capital as opposed to a return on their investment. For all practical purposes those maturities have a negative yield when you use the BLS own CPI of 0.4% thus it does not take rocket science to confirm what the Main Street participants said in the article posted below this one and why foreigners do not trust this nation at this point in time:

The United States is NOT a stable place for long term investing at this time.

Tonight I’ll post part 2 of the Obamarket Special as some family events delayed my finishing it last night (sorry, I am married ya’ know). I’m sure I will have more to add about the 1-3-6 yields and the evolving situation in our equity and bond markets. One last thing folks; ignore the earnings reports and look at the last 4 years worth of revenue figures and that should tell you more about the status of our economy and this hope and change recovery than anything else. I fear that the revenue numbers on the top line will be disturbing, just like Lennar’s which I posted several days ago.

http://johngaltfla.com/blog3/2010/01/11/1-3-6-treasury-bill-alert-wow/

ZeroHedge.com | The Dark Gray Swan: No More Foreign Dollars With Which To Buy US Treasuries

12/17/2009 21:31 -0500 Could the next black/green/dark gray swan be so obvious that it has avoided everyone? Well, except for the deputy governor of the Bank of China, who just gave the world a startling reminder of economics 101, when he said that it is "getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing the supply of dollars overseas." Oops.

The funny thing about natural (and economic) systems: they can only be pushed so far before they snap back to default state. With the entire world embarking on an unprecedented spree of domestic bubble blowing to mask the collapse in global GDP, everyone forgot to trade. Zero Hedge has long emphasized that the drop in world trade can only sustain for so long before it brings the current destabilized system back to some form of equilibrium. Because with every country intent on merely printing more of its own currency, whether it is to build bridges or to make the stock of electronic book fads trade at 100x earnings, said countries ran out of non-domestic cash. Alas, this is most critical for the United States, now that Treasury monetization is over, as the US needs to constantly find foreign buyers of its debt to fund unsustainable deficits. Foreign buyers who have US dollars. And according to Shanghai Daily, this could be a big, big problem.

READ MORE:

http://www.zerohedge.com/article/dark-gray-swan-no-more-foreign-dollars-which-buy-us-treasuries

Market-Ticker.org | Here It Comes... (Sovereign Treasury Sales)

December 3, 2009

I have repeatedly warned that there's an "end game" coming if we do not cut out the monetization games.

I have repeatedly warned that the "end of the world" scenario comes about if The Government cannot finance its operating requirements (e.g. interest cost exceeds income), as that event will result in an instantaneous "death spiral" of credit downgrades and ramping CDS spreads, which in turn drive up interest rates further, etc.

I have repeatedly warned that if we do not get our own house in order others will force it upon us, as we have given them the weapons to do so by selling trillions of dollars worth of Treasuries to overseas sovereigns and institutions over which we can exert no control (except by threatening to use our 6,000 nuclear weapons.)

This morning there's a nasty rumor on the wire - that Japan may be intending to sell US Treasuries ....

SOURCE

http://market-ticker.org/archives/1693-Here-It-Comes...-Sovereign-Treasury-Sales.html