28230
Foreign Gov’ts Sell Record  Amount of US Notes, Bonds
World Economy

Foreign Gov’ts Sell Record Amount of US Notes, Bonds

Foreign governments and central banks sold long-term US Treasuries at a record pace in August, according to Treasury Department data released Friday in Washington.
The data are less clear on which countries were the main culprits in the $41.1 billion of net sales. While holdings attributed to China, the largest foreign owner of Treasuries, rose in August by $1.7 billion to $1.27 trillion, those in Belgium plunged by $44.8 billion to $110.7 billion.
Belgium has been regarded by analysts including David Woo of Bank of America Corp. as a transit point for China’s transactions involving Treasuries. The US Treasury data include a disclaimer that a nation’s assets in a custodial account in a third country won’t reflect the true ownership of securities, so looking at holdings attributed to individual nations can be misleading.
“There’s no other buyer that would have the incentive to go through Belgium,” said Aaron Kohli, a fixed-income strategist at Bank of Montreal, one of 22 primary dealers that trade with the US central bank. “There’s no definitive link there, but a lot of what people glean is from the sheer size of the holdings. Definitely the decline suggests there’s been some significant active selling.”
Attributing the Belgium sales to China would make more sense, because the world’s second-biggest economy has been selling US debt to support the yuan after a surprise devaluation spurred bets on a weaker currency.
Bloomberg News reported in August that China cut its holdings of US Treasuries that month to raise dollars needed to support the yuan. Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said a person familiar with the matter, who asked not to be identified as the information wasn’t public.

 Global Turmoil
The data flesh out some of the story behind the month’s global financial turmoil that contributed to the Federal Reserve’s September decision to refrain from raising interest rates. With China’s economy weakening and the greenback up 19% in a year against a basket of currencies, the People’s Bank of China on Aug. 11 unexpectedly devalued the yuan, resulting in its sharpest decline since 1994.
China had previously reported a record $93.9 billion drop during August in the nation’s foreign-exchange reserves, and the country’s stock-market plunge later in the month sparked a worldwide selloff. The reserves dropped another $43.3 billion in September to $3.51 trillion, bringing the decline to $479 billion since the peak in mid-2014.
Private foreign investors bought a net $6.2 billion of Treasury bonds and notes in August, resulting in net foreign selling of about $35 billion when including the official sales.
The Treasury’s report, which also contains data on international capital flows, showed net foreign purchases of long-term securities of $20.4 billion in August. It showed a total cross-border outflow, including short-term securities such as Treasury bills and stock swaps, of $9.2 billion.

Short URL : https://goo.gl/9FTA48
  1. https://goo.gl/NKqOUy
  • https://goo.gl/XsbzPM
  • https://goo.gl/DDD1IK
  • https://goo.gl/g3UYZl
  • https://goo.gl/Y4CIo8

You can also read ...

The 2017 “WannaCry” cyber attack demanded affected users wire ransom money via Bitcoin.
You don’t have to be a digital whizz kid to know that the wars...
South Africa Wants to Increase VAT Rates
With an economic downgrade to junk status, a slowly growing...
A woman protests a planned coal-fired plant  in southern Thailand.
Southeast Asian governments are finding themselves caught...
Singapore to Hike GST for First  Time in Decade
Singapore is expected to raise goods and services tax for the...
Malaysia has shown willingness to move towards  a market-oriented mechanism.
Forty-three World Trade Organization members who participated...
62% of Japan Loan Rate  Below 1%
After two years of the Bank of Japan guiding key interest...
Fitch Upgrades Greece
Fitch Ratings raised Greece’s sovereign credit rating by one...
China’s Commerce Ministry says the proposed US measures are groundless.
China said proposed US tariffs on imported steel and aluminum...

Trending

Googleplus