World Economy

US Creditors Want Their Money Back

US Creditors Want Their Money BackUS Creditors Want Their Money Back

Five major purchasers of US debt have been selling US government bonds in a sign of a global economic slowdown spurred by China, according to figures just released by the Federal Reserve Board in Washington.

The largest holder of US Treasuries, China shed $12.5 billion in American bonds in September with Japan selling a hefty $19.9 billion, Sputnik reported.

The Caribbean offshore companies dumped $7.2 billion, the OPEC countries—$1.9 billion and Brazil–$3.7 billion.

Russia slashed its holdings by a mere $0.8 billion to $89.1 billion after a seven-year record purchase of $21.4 billion in July and August.

In September Britain and India shed $8.9 billion and $2.1 billion in US bonds while the BRICS countries sold an equivalent of $18.9 billion.

These sell-offs were made up for by massive purchases by Ireland, Switzerland, Luxembourg, Singapore and a number of other creditors.

As a result, September saw foreign central banks buying $3 billion worth of US Treasuries in the first such jump in five months bringing the total figure to just over $6.1 trillion.

Since January, large government purchasers of US debt have shed $115.3 billion worth of US notes and bonds.

If this trend continues, 2015 will become the first time sovereign creditors have sold US Treasury bonds.

 Bonds Fall

US government bonds settled lower but pared most of their earlier decline after the Federal Reserve’s October meeting minutes failed to offer clear clues on a potential interest-rate increase next month, WSJ reported.

The minutes indicated most officials thought conditions for raising rates “could well be met by the time of the next meeting.” But “a couple of members expressed concern that this wording change could be misinterpreted as signaling too strongly” a December rate increase.

The minutes suggested a Fed rate increase remains dependent on economic data. Bond yields have risen since the October policy meeting as investors prepared for a rate increase in December. Now the tone of the minutes encouraged some buyers back to the bond market.

“Overall I don’t think the minutes change the story much about a possible rate hike in December,” said Thomas Roth, executive director in the US government bond trading group at Mitsubishi UFJ Securities (USA) Inc. in New York.

In late-afternoon trading on Wednesday, the yield on the benchmark 10-year treasury note was 2.27%, compared with 2.28% right before the minutes.

Yields fall as prices rise. The yield was 2.26% on Tuesday.