The Federal Reserve reports foreign investors selling $23B in Treasurys in the week ended Dec....


The Federal Reserve reports foreign investors selling $23B in Treasurys in the week ended Dec. 28, bringing their holdings down to $2.67T. Looking at the data series which goes back to 2002, it's the 2nd highest total of weekly sales ever, and brings net sales over the past month to $69B.

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Comments (44)
  • Jason Tillberg
    , contributor
    Comments (1326) | Send Message
     
    Lever up primary dealers, it's all you.
    30 Dec 2011, 08:19 AM Reply Like
  • youngman442002
    , contributor
    Comments (5123) | Send Message
     
    so that is why the return on the 10 year is DOWN to 1.9%...wait...something is wrong here.....and yes Alice..SOMETHING is wrong here....got gold
    30 Dec 2011, 08:19 AM Reply Like
  • Virg
    , contributor
    Comments (26) | Send Message
     
    Seriously, if this is the case why is the 10 yr. rate down not up?
    30 Dec 2011, 09:29 AM Reply Like
  • Jamiecal2
    , contributor
    Comments (17) | Send Message
     
    Never touch the stuff....
    30 Dec 2011, 04:46 PM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    YES, the market is actually disconnected from fundamentals.

     

    We know the game is rigged yet we scratch our heads when it does not make sense, when the game makes sense the rules have to change otherwise everyone could win.

     

    For someone to win someone has to loose, just like Vegas...

     

    -
    30 Dec 2011, 08:01 PM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    John,

     

    It isn't disconnected from the fundamentals. Treasuries reflect fear and equities reflect earnings.

     

    Only cult followers believe the End of the World is Imminent.
    31 Dec 2011, 05:04 AM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    That and the fed is buying most of the treasuries to hit its target rate.
    31 Dec 2011, 01:34 PM Reply Like
  • David Urban
    , contributor
    Comments (1031) | Send Message
     
    When correlations on all asset classes approach 1 strange things start to happen.
    30 Dec 2011, 10:30 PM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    Really? Treasuries have a correlation near 1 with equities?

     

    Didn't know that ....
    31 Dec 2011, 05:05 AM Reply Like
  • David Urban
    , contributor
    Comments (1031) | Send Message
     
    Look at the correlations between asset classes. They are higher than ever which is dangerous.

     

    When I wake up in the morning I can tell where the stock market will open based on the gold and silver price because they are moving in the same direction. That should not be happening in this environment.
    31 Dec 2011, 12:40 PM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    I think David had a few beers before he went on SA
    31 Dec 2011, 01:35 PM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    "Really? Treasuries have a correlation near 1 with equities?

     

    Didn't know that ...."

     

    Lol I was thinking the same thing.
    31 Dec 2011, 01:35 PM Reply Like
  • just sayin'
    , contributor
    Comments (154) | Send Message
     
    Help me out and tell me where the money went. Could it be a big drop in gold creating opportunity or is this money headed to equities? I think it's going to gold.
    31 Dec 2011, 12:15 AM Reply Like
  • Mike Burns
    , contributor
    Comments (45) | Send Message
     
    The rates are near nothing only because Uncle Ben buys up all the treasuries sloshing around on the market (i.e. monetizing the debt). Clearly this will lead to inflation or Ben will need to retreat and let rates rise.

     

    Either one ushers in The Collapse. Choose your demon.
    31 Dec 2011, 12:16 AM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    That's a big exaggeration. Fed purchases do not dominate the market.
    31 Dec 2011, 05:07 AM Reply Like
  • winningtrader
    , contributor
    Comments (2459) | Send Message
     
    Well, last fiscal year the FED did QE2 and bought 600 bio of treasuries. The fiscal deficit was 1.3 trillion. So, the FED bought almost half of the net issuance of treasuries. I'd say that means that the FED dominates the market. Now they are doing 400 bio of long dated bonds. They are definitely going to do QE3 as well.
    31 Dec 2011, 06:39 AM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    Winningtrader,

     

    The relevant measure is not Fed purchases as a percent of net issuance, but Fed purchases as a percentage of all purchases. I guarantee that will be a lot smaller percentage.

     

    In order for the Fed to suppress yields, it would be necessary for them to be in the market everyday. The Fed is not in the market today, yet even when its absent, yields do not move higher.

     

    A much better explanation of bond yields is fear.
    1 Jan 2012, 09:49 AM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    "That's a big exaggeration. Fed purchases do not dominate the market."

     

    That right, I meant to say in an earlier post that the fed AND pd's are dominating the market. And of course, PD's HAVE to bid on treasuries at auction.
    31 Dec 2011, 01:38 PM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    Again, you miss the point. They are dealers. They buy for their own accounts and for their customers.

     

    Most of what they buy is resold.

     

    So what is driving demand is end users, not intermediaries.

     

    Since Treasury yields have varied dramatically over the last forty years and the current primary dealer has system has been in place the entire time, the primary dealers don't explain variations in Treasury prices.
    1 Jan 2012, 10:02 AM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    The feds bond buying to keep interest rates does...of course.

     

    What point did I miss? I know they're dealers...but when the pds buy treasuries at auction that impacts the price...DUH

     

    When they flip them to the fed that impacts the price...DUH

     

    Therefore, the fed's buying of treasuries drives down rates. I can't believe I'm even typing this out right now.

     

    I'm not even sure what you're saying. The fed's buying of treasuries lowers treasury yields ceteris paribus. You might as well argue that the earth is flat if you want to disagree with this point
    1 Jan 2012, 10:01 PM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    The point is that we have a primary dealer system as far back as I can remember. So the primary dealers are not responsible for the low prices seen today. Primary dealers have been key buyers during the last 40 years during which time 30 year yields have varied from rates as high as 7% to today's low rates.

     

    The primary dealers have been major market players - so they do not explain today's low rates.

     

    Treasury bond yields are not surprising given the balance sheet recession from which the world just emerged. We see in America today many of the problems experienced by Japan after its balance sheet recession. Same set of problems - ultra low interest rates, stubbornly high unemployment, inability of the Central Bank to lower interest rates, etc.
    2 Jan 2012, 11:32 AM Reply Like
  • pokalolo
    , contributor
    Comments (597) | Send Message
     
    Just to chip in 2 cents. MF Global was a dealer and many other dealers are leveraged as much as MF was......... There is a small chance if things broke the wrong way in the ME an OPEC joined the BRICs and demand the new SDR instead of the dollar ! The Fed can go down.. Wouldn't that be great ! Mandarin would be the new language taught in France an the US...............weeeeeee
    2 Jan 2012, 11:43 AM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    The pds buy the bonds from the fed in omos. Since the prime rate is zero, the pds ARE responsible for low rates because they're buying the damn bonds.

     

    "inability of the Central Bank to lower interest rates, etc."

     

    What do you mean? The fed controls interest rates through reserve balances.

     

    What are you smoking over there in paris.
    2 Jan 2012, 04:31 PM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    "The point is that we have a primary dealer system as far back as I can remember. So the primary dealers are not responsible for the low prices seen today."

     

    Der der der. The fed's zirp is DIRECTLY responsible. So if you want to play semantic games I guess you could say the pd's aren't directly responsible. They just play a ROLE in the process because they have to bid at auctions. I can't believe I'm even having this conversation.
    2 Jan 2012, 04:33 PM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    "Mandarin would be the new language taught in France an the US...............weeee...

     

    I thought all this china taking over the world crap would end. I guess not.
    2 Jan 2012, 04:34 PM Reply Like
  • pokalolo
    , contributor
    Comments (597) | Send Message
     
    PV, just a little sarcasm,but,the Fed flooding the planet with 9 trillion dollars an covertly bailing EU banks an corporations and lying about it is criminal. Thank goodness that Bloomberg an Fox joined and suited the Fed an the Court forced the Fed to release the info.

     

    If we had a Republican in the WH I do think Ben would be brought up on charges ! He should be !

     

    And, my comments concerning the US reserve will come to pass and if you don't think that two enemies like China an Japan coming together an signing a swap agreement without the US reserve is a monstrous wake up call. Add that to the BRICs are already dollar less..An OPEC wanting agreements without US dollar an now Iran sanctions ! I will be the canary and I am prepared ! Luck to all, pok
    2 Jan 2012, 05:10 PM Reply Like
  • pokalolo
    , contributor
    Comments (597) | Send Message
     
    2 quick factoids...... Before the 2007 horrors French banks were the power in China for decades an did 75% of the small business lending there. Now that has all ,but, dried up an the shadow system that followed is terrible an much like payday loans in the US that is killing the poor !

     

    And, US grade schools are now teaching Chinese in huge numbers. And that is great and every student in the US should be fluent in English an Spanish as NAFTA should force us to join with out Latin Neighbors to compete with EU an Asia !
    2 Jan 2012, 05:16 PM Reply Like
  • tjbjr34
    , contributor
    Comments (2) | Send Message
     
    Another case of Bernanke working overtime to get Obama elected in 2012 - it's way past time for him to be removed from his re-election campaign - it's a sad commentary for the Fed to be supporting the guy who is destroying this economy but socialism is running amuck with the Fed being the cheer leader - no telling what QE 3 will look like but its sole purpose will be to get a Socialist re-elected - this will be sad in the end !!!
    31 Dec 2011, 09:22 PM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    Spare us the nonsense. Germany has experienced an economic renaissance and their public spending is much higher than the States.

     

    There is nothing really socialist about the United States. It is paradise for entrepreneurs.
    1 Jan 2012, 09:51 AM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    You may need to spend a bit more time in America sir because your opinion is disconnected from reality.
    Would you be Mr. Multinational apartment flipper if it was so good in the US?

     

    Since you have a degree in Economics and are vested in the status quo can you explain the practices of Front Running coupled with High Frequency trading and the practice of "Black Pools".

     

    In a fair and honest economic system why are practices like this allowed to continue?

     

    1 Jan 2012, 01:15 PM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    Have you ever tried to open a business in the US? Its getting harder and more expensive due to regulations and large businesses using the government to crush you.

     

    The us is a paradise for entrepreneuers? You're talking out of your ace you socialist piece of garbage.
    1 Jan 2012, 10:03 PM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    No one goes to Europe because of its tax and regulatory framework. Sixty % of my salary is paid to the State - 24% employee social contribution, 17% unemployer
    2 Jan 2012, 11:36 AM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    No one goes to Europe because of its tax and regulatory framework. Sixty % of my salary is paid to the State - 24% employee social contribution, 17% employer social contribution, 2% local tax and 16% flat tax. Not to mention the 25% VAT tax on most goods and services.

     

    And of course, in order to hire myself as an employee I had to send a copy of my university diploma to the Hungarian Work Authority.
    2 Jan 2012, 11:40 AM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    Since I worked in business in both the US and Europe, I assure you I know more than you do. Based on your reply, it appears I know a lot more.
    2 Jan 2012, 11:41 AM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    "No one goes to Europe because of its tax and regulatory framework. Sixty % of my salary is paid to the State - 24% employee social contribution, 17% unemployer"

     

    EW! At least you have crepes and art though.
    2 Jan 2012, 04:35 PM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    "Since I worked in business in both the US and Europe, I assure you I know more than you do. Based on your reply, it appears I know a lot more."

     

    Your logic seems to go like this:

     

    'The US is more entrepreneurial than where I have worked in europe.

     

    Therefore, the US is an entrepreneurial paradise!

     

    Did I mention I've never started or owned a business in the US? der der der'

     

    What kinda drugs are you doing over there comrade
    2 Jan 2012, 04:36 PM Reply Like
  • pokalolo
    , contributor
    Comments (597) | Send Message
     
    Common, why not sell some treasuries at record high prices an move some $s to the EU debt at 4 times the rate as long as the ECB has basically did what the Fed did for 3 years ! A no brainer and the Chinese are in thatg equation ! Smart traders are smart traders and when you know the "twist" is ending soon why not lock in a nice gain!
    1 Jan 2012, 05:22 AM Reply Like
  • American in Paris
    , contributor
    Comments (5495) | Send Message
     
    Because default risk is real.
    1 Jan 2012, 09:52 AM Reply Like
  • bearfund
    , contributor
    Comments (1550) | Send Message
     
    Because sovereign debt is hopelessly mispriced, and that includes Europe as well as the US. The markets for this stuff are extremely heavily manipulated by people with both political and banking interests, probably the most heavily so in the world after gold. It is absolutely ridiculous for Italy to be paying 6 or 7% on their notes when everyone knows they are way past the point of no return and a "voluntary, totally not a default at all" restructuring (which will leave hedges useless) is a given. The US is almost as bad, but right now people are looking elsewhere for problems so that one will be allowed to continue growing out of control until another day. So if you are looking for pair trades here, I would always short the sovereign against something productive like a major oil company that has incentives to keep its debt at manageable levels. Pairing off one sovereign against another just seems silly; you're either hoping the central bankers will do something that helps you or you're counting on being able to time the waves of crisis and default that periodically sweep across the sovereign debt world. Hardly seems worth it if you have to use your own money. I guess it's an easy game if you're fabricating money with a taxpayer backstop.
    1 Jan 2012, 12:20 PM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    This I agree with. It looks like you understand mmt. THat's probably good.
    1 Jan 2012, 10:03 PM Reply Like
  • PVizzle
    , contributor
    Comments (743) | Send Message
     
    Take off the tinfoil hat plz.
    2 Jan 2012, 04:37 PM Reply Like
  • pokalolo
    , contributor
    Comments (597) | Send Message
     
    Don't forget the bonds if they crap out have CDS backing and since it isn't countries that will lose the CDS payments will be made.Who holds all the swaps ? US banks and there hidden off balance sheet in the OTC market in shares..........

     

    That is why Geitner begs the EU an ECB to PRINTTTTTTTTTTTTTTTT.. If the PIIGS go the EU big banks all go an an US big banks are holding the whole ball of wax !
    2 Jan 2012, 05:24 PM Reply Like
  • The Long Tail of Finance
    , contributor
    Comments (1694) | Send Message
     
    Here's a thought: check out where Japanese 10yr yields have gone over past decade and then ask yourself if US Treasuries could still have some room to run (i.e. yields continue to fall towards 1% or go even lower).
    1 Jan 2012, 12:15 PM Reply Like
  • pokalolo
    , contributor
    Comments (597) | Send Message
     
    TLToF, absolutly ! Pimco an Mike Platt are betting big on the 10 year going to one %......... Most here are way too bullish and France should be downgraded soon. If it happens while the "twist" is still underway the TLTs are the way too play as the yield on that is in the 2%s,but, taking some Bond profits an going to some high % EU bonds in short term will work......

     

    Me........ I have gone big into 10 year Brazil bonds over 12% and compounding in 6+% bank accounts...........
    I am very sure by the time they mature the Real will increase in value over the dollar an the Fed's plan it to weaken it. Maybe EU's problem will rally the dollar short term,but 9/10 years out Brazil's commodities will drive them into the top economic 3 from number 6 as they just passed England.......

     

    Note : Yes there is a 6% foreign investment tax now,but, I have an established account from the 80s and for new investers making the trip to buy an open an account is tax deductable an will offset quite a large bond buy.....
    1 Jan 2012, 12:28 PM Reply Like
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