Foreign central banks were once again net buyers of US obligations in the week ending August 29th. However, they remained net sellers of treasuries, although at a much reduced pace from recent weeks. Reuters does not appear to have produced their usual Thursday summary this week, so Doom will endeavor to produce the usual numbers from the Fed report. Just for yucks, we’ll borrow the Reuters boiler plate from a recent number to make the Doom version a bit easier to find should anyone out there be googling. Their report was one of only a few weekly hits on the Google News search |"agency debt"|.

The Fed said its holdings of Treasury and agency debt kept for overseas central banks rose $3.355 billion in the week ended August 29, to stand at a total of $1.983 trillion.

The breakdown of custody holdings showed overseas central banks sold $3.064 billion in Treasury debt to stand at a total $1.207 trillion.

The foreign institutions bought securities from government-sponsored agencies like Fannie Mae and Freddie Mac, adding $6.419 billion to their holdings, to stand at a total $775.8 billion.

 

Once again, thanks twist for the updated chart and graph.

We here at Doom like to think our trusty Reuters copywriter merely called in sick Thursday so that she could enjoy an extra long Labor Day weekend. On the other hand, perhaps remarks like this from her August 16th effort began attracting a bit of unwelcome attention.

"Bond prices have surged over the past two months as fears over tightening credit conditions have reached fever-pitch. The heavy foreign selling suggests domestic purchases were even stronger than the sharp upward price moves would indicate."

 

In any case, Google searching for the post language failed to turn up the usual Thursday report on net foreign central bank purchases of US obligations. Doom had to go through an exercise in reverse engineering to establish how to get this week’s numbers from the Fed report.[33] Many thanks to twist and Doomer V for their assistance. What made this especially entertaining was that the last posted report had an incorrect value for the total agencies. This didn’t become obvious until we started looking at earlier versions of the Reuters report and comparing them with the Fed. The chart and graph continue to be rather compelling.

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Notes and References

[33]: "Federal Reserve Statistical Release H.4.1 Factors Affecting Reserve Balances"

August 23rd report
Memo (off-balance-sheet items):
Marketable securities held in custody for foreign
official and international accounts(2,7) 1,986,411 – 18,410 + 316,038 1,979,224
U.S. Treasury 1,218,830 – 25,132 + 79,743 1,209,858
Federal agency 767,582 + 6,723 + 236,296 769,366
Securities lent to dealers 5,081 + 380 + 3,853 7,948

August 30th report
Memo (off-balance-sheet items):
Marketable securities held in custody for foreign
official and international accounts(2,7) 1,979,353 – 7,058 + 300,473 1,982,579
U.S. Treasury 1,205,372 – 13,458 + 61,554 1,206,794
Federal agency 773,981 + 6,399 + 238,919 775,785
Securities lent to dealers 5,268 + 187 + 999 8,567

1,982,579 – 1,979,224 == 3,355

1,206,794 – 1,209,858 == -3,064

775,785 – 769,366 == 6,419