Clearly 100% behind them? With what??

Igors word “BANKRUN”

I couldn’t believe this line: [#1]

They probably don’t have the same understanding of what the Treasury has suggested really means.

Right. Foreign central banks have bought billions of dollars of GSE and Treasury notes for years, but they haven’t taken the time to really understand them?

My guess is that they cut back as much as they did because they do.

“US buyers take lion’s share of record Fannie deal”, India Times, September 11, 2008.

“This is telling you that US money managers clearly understand the value of what’s happened with Fannie and Freddie and the government guarantee — that the Treasury is 100 percent behind them,” said Andrew Brenner, co-head of structured products and emerging markets at MF Global.

“Overseas money managers are still concerned about being associated with organizations that have had financial problems and they probably don’t have the same understanding of what the Treasury has suggested really means,” he added. Fannie Mae said it placed 63 per cent of its new notes with accounts in the United States, 12 per cent in in Asia, 8 per cent in Europe and 17 per cent to others investors.
…

Several market sources said Fannie Mae drew $1.5 billion more in orders than the amount of notes it sold. “Foreign investors almost certainly were buyers of agency debt in the secondary market in recent days; the mammoth rally could not have happened without their involvement,” Crescenzi added. Federal Reserve data on Thursday will provide more signals about central bank involvement in agency-issued securities in the days following the US seizure of Fannie and Freddie. Overseas central banks dumped agency-related securities for seven straight weeks, unloading more than $27 billion of the record $986 billion they held in mid-July, Fed data showed last Thursday.