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Huge drop in foreign holdings of Treasury securities this past week (second-biggest ever)

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posted on May, 26 2011 @ 09:07 PM
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Most extreme flight from Treasuries since "the great quant crash of 2007."

These kinds of swings don't bode well for things in general. Its a bit of a surprise, too, after some period of growth in this specific metric.

I'M scratching my head thinking what could possibly have caused this last week...no major events come to mind...maybe it's "just that time." Or itchy algos triggering each other? Or something else we don't know about?

I doubt this is "the big one," but the last time there was a drop of this magnitude we got the the worst financial meltdown since the 20s. Correlation does not equal causality, yet even so, its not a happy thing to see (unless you were short dollars this week of course).




Treasurys to its balance sheet, or that total reserves hit a new all time record, increasing by $53 billion to $1.59 trillion. No. The biggest surprise was that in the just ended week, Treasury securities held in custodial accounts at the Fed, considered by some the best real-time representation of foreign holdings of US Treasurys considering that the TIC update is not only wildly inaccurate in its monthly update, but is also 3 months delayed, dropped by the largest amount in 4 years. From a total of $2.704 trillion, USTs held in custodial accounts declined by $18.7 billion to $2.685 billion. This is the second largest decline in history, only topped by the $22.1 billion in the week of August 15, 2007 which is the week that followed the great quant crash of 2007 that wiped out, among others, Goldman Alpha. This observation is in stark contrast to the recent record strength of bond issuance, after both the 5 and 7 Years auctions posted record Bid to Cover investor interest.


Source: Our friends at Zero Hedge

Below: Treasurys heald in custodial accounts, a good indicator of foreign Treasury holdings:


edit on 5/26/11 by silent thunder because: (no reason given)




posted on May, 26 2011 @ 09:55 PM
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reply to post by silent thunder
 


I said it yesterday and it still applies;
It's only a matter of time. The dollar will be worthless or very close to worthless soon enough.


So be prepared! Food, guns, and bullets. And I've got plenty of all three.

edit on 26-5-2011 by FTD Brat because: statement needed clarification



posted on May, 26 2011 @ 10:10 PM
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reply to post by silent thunder
 


Thanks for the info.


I personally dont know how everything is standing up still.
The only thing to do now, is hoping for the best while preparing for the worst.



posted on May, 27 2011 @ 02:45 AM
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I agree with the views here, as with other threads, regarding how in the world does it continue. Well isn't it all being artificially propped up? QE is pouring so much capital into the system that it keeps things chugging along, but evidently its not accomplishing much on the ground where jobs, property values and living standards are concerned.



posted on May, 27 2011 @ 10:19 AM
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reply to post by silent thunder
 


I cant wait to see what happens June 30th when QE2 ends.


I dont see it playing out so well. Whos going to buy the 80% of the bonds the FEDs are buying right now when there gone?

Off topic,
you still in Japan Silent Thunder? Theres alot of bad news coming out about those reactors



posted on May, 27 2011 @ 10:49 AM
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As a percentage of outstanding debt this decline is much less than the decline in 2007 by a magnitude of about 40%.
$20 billion is a pin drop compared to the $2 trillion plus in foriegn custodial holdings. Zero hedge is always trying to incite panic.



posted on May, 27 2011 @ 10:51 AM
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Originally posted by sligtlyskeptical
As a percentage of outstanding debt this decline is much less than the decline in 2007 by a magnitude of about 40%.
$20 billion is a pin drop compared to the $2 trillion plus in foriegn custodial holdings. Zero hedge is always trying to incite panic.


Yeah but that was back when we were not printing money to buy bonds and people were willing to buy our bonds
edit on 27-5-2011 by camaro68ss because: (no reason given)



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