Foreigners Treasury Buying Binge Accelerates in June as Redollarization Continues.
China adds $44 billion in Treasuries in June.
Saudia Arabia, UK, Swiss and India Boost U.S. Treasury Holdings Again in June.
Russia Cuts holdings for first time all year.
Mexico continues to dump Treasuries.
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Foreigners Loading Up on U.S. Treasuries Again
Foreign holdings of U.S. Treasuries grew $176 billion from November 2016 – June 2017.
Who’s Buying
China
China and Russia may be working on developing their own digital currencies, but in the mean time they are also rebuilding their stacks of U.S. Treasury securities they sold off during the past few years.
China was particularly troubled when the U.S. Federal Reserves embarked on quantitative easing in 2009 and took interest rates to zero. Russia sold off a good portion of its Treasuries after the US and other nations imposed sanctions on Russia in 2014. Both countries developed de-dollarization initiatives in response to U.S. monetary and foreign policies that included selling U.S. Treasuries and adding gold to their foreign reserves.
Russia and China stopped selling their U.S. Treasury holdings and began buying Treasuries late last year, although Russia sold treasuries in June (see below).
China added $44.3 billion in U.S. Treasury Securities in June.
Chinese Holdings of U.S. Treasury Securities
Chinese holdings of U.S. Treasury securities are up $97.2 billion from November 2016 to June 2017.
Brazil, Switzerland, United Kingdom, Saudi Arabia and India
Saudi Arabian Holdings of U.S. Treasury Securities
In April 2016, Saudi Arabia threated to dump its US Treasury holdings if the US Congress passed the 9/11 bill. Congress passed the bill in September of 2016, President Obama vetoed the bill and on September 28, 2016, congress overwhelmingly voted to override the President’s veto.
Since September 2016, Saudia Arabian US Treasury holdings have increased $53.4 billion from $89.4 to $142.8 in June 2017.
Who’s Selling
Mexico
Lat month we noted that Mexico was dumping U.S. Treasuries and had been selling U.S. Treasuries ever since Donald Trump announced he was running for President. In June, Mexico continued its selling spree, shedding another $6.6 billion.
Mexican Holdings of U.S. Treasuries
Chronology of a Trump Dump
Donald Trump announces on June 16, 2015, he is running for President -Mexican Treasury Holdings stand at $86.3 billion
Trump wins New Hampshire Republican Primary in February 2016 – Mexican Treasury Holdings fall to $72.2 billion.
Trump wins nomination Republican nomination for President in July 2016 – Mexican Treasury Holdings fall to $48.3 billion
Trump is President five months – Mexican Treasury Holdings fall to $32.3 billion in June 2017.
Since Trump’s Election in November 2016, overall foreign holdings of U.S. Treasuries have increased.
In July 2017, in “Re-dollarization Continues as China, Russia & Saudis Load Up on Treasuries” we noted a decided shift in foreign appetite for U.S. Treasuries as the aforementioned countries as well as Switzerland, Britain, Japan and BRICS nations Brazil and Indian also added to their U.S. Treasury holding since November 2016.
Russia
Russian Holdings of U.S. Treasury Securities
Russian holdings of U.S. Treasuries were up $28.3 billion from October 2016 to June 2017.
Foreign Holdings of U.S. Treasury Securities Source: http://ticdata.treasury.gov
Further Reading
The Fed protects the dollar first and foremost, not the stock market or even the too big to fail shareholder interests. Without the dollar neither of the latter two can function. Everything runs on the dollar.
IS THE U.S. DOLLAR BECOMING THE NEW PETRO DOLLAR?
DOES THE FED NEED TO RAISE INTEREST RATES TO COMBAT DE-DOLLARIZATION INITIATIVES? (April 2015)
The Fed WILL Raise Rates This Year ( June 2015)
WHY THE FED RAISED INTEREST RATES (December 2015)
WHY THE FED RAISED RATES LAST YEAR AND WILL DO SO AGAIN THIS YEAR (May 2016)
HOW THE FED MANAGES THE DOLLAR AND AVOIDS COLLAPSE June 2016
TRUMP SHIFT TO CHINA: DOLLAR PROTECTION STRATEGY? April 2017
WHY SAUDI ARABIA MATTERS IN HELPING TO KEEP THE U.S. DOLLAR AS THE WORLD’S RESERVE CURRENCY (October 2013)
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