While there were few nuggets worth mentioning in yesterday's H.4.1 update, one item is certainly worth noting. After we pointed out last week when we noted that there was a record monthly dump of Treasury paper from the Fed's custodial account amounting to some $69 billion, the week ended January 4 has seen yet another outflow, this time amounting to $9 billion in US Treasurys. This is the 5th week in a row of foreigners selling US paper, and while it has yet to match the record 6 weeks of outflows from October, the consolidated outflow notional is now a record high at $77 bilion, higher than the previous record of $52 billion. Needless to say banks from around the world are repatriating dollars.
The end/start of year can result in many odd trends that do not hold long term, but this needs to be watched. If the Treasury paper liquidation continues, bye, bye low interest rates.
Now this is serious if the trend continues! This could undermine any economic recovery faster than you can run from a bear!
ReplyDeleteFed/ecb/banks via swaps have/will buy the debt...base money printing party in the next few years...got physical gold? The system died in 2008 officially, was pretty much dead before that...now it's just on life support until the plug is pulled...
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