Finance

US Treasury Dump Accelerates

Global sell-off of US Treasuries by central banks in 2016 has accelerated to the fastest pace since 1978, according to a recent article by CNN reaching a net $123 billion.

As illustrated in the chart below, net first quarter sales are already more than half of the net selloff for all of 2015 (Source: Treasury.gov).

Treasury Chart

Since the third quarter of 2015, global central banks have liquidated nearly $266 billion in US Treasuries.

And, it’s obvious analysts are taking notice over the past several months, as major news outlets produce alarming headlines: Treasury Sell-Off Gets Serious (Barrons), How the Treasury selloff could turn ‘chaotic’ (CNBC), and The biggest American debt selloff in 15 years (CNN).

Much of the blame has been placed on uncertainty concerning China, but that is a mere distraction.

Bundled secretly with other “oil exporting nations” for decades, the US recently released data regarding US Treasuries held by Saudi Arabia, as reported by Bloomberg last week.

Interestingly, Saudi Arabia is selling US Treasuries at the same time it is seeking to raise money with a bond issue of its own, as reported by CNBC in April.

Independently, those are simply signs that Saudi Arabia needs liquidity.  Together, they signal perceived weakness (globally) in the US Treasury market.

Why else would a country seeking to raise capital sell foreign holdings that are declining in value…unless they projected even further declines?

As US Treasuries continue to flood the market, rates will continue to rise and Treasury values will continue to fall.  How fast and how far is yet to be seen…

Proceed with caution!

 

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2 Comments

  1. I know so little about this, except the high points, but it is worth the worry. The way our currency has been made into vapor is enough reason to worry. I think the last few presidents had this goal in mind, also, especially Obama, but Bush, to a certain extent, through all his borrowing. I wonder if there can be a fix to this?

  2. Honestly, I think the only fix is also the one the people who wield true power at the top of the economic/geopolitical food chain want to avoid at all costs but will ultimately have to face. We need a complete monetary reset, which will mean a lot of financial pain. That’s one of the reasons people are flocking to cryptocurrencies. The people at the top want the reset, don’t get me wrong. They just want it to happen without anyone realizing they created the whole mess. They want a one-world monetary system. The IMF has been pushing it for years.

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