"For economists now to make forecasts is a pretty difficult thing," said Ray Torto, chief global economist at real-estate firm CB Richard Ellis. "All of our models are outside the territory in which they’ve been built." [1]

The NY Fed was back to work on the 2nd, so we didn’t have to wait until Monday for the latest H.4.1 update. Since housing market economists have started blaming their tools, it’s not surprising that foreign central banks continue to be wary of US paper based on MBS, but perhaps the holiday season slowed down their selling activity a bit.

This week’s Reuters report [2] has foreign central banks buying a healthy $12.872 billion net of Treasury Debt. This is down quite a bit from the recent near-record buys. The report was, as usual, based on the weekly update from the NY Fed’s H.4.1 table site.[3] Here is Doom’s updated CSV version of the agencies and treasuries foreign central bank holdings data set.[4]

The central banks sold only $4.475 billion of Agency Debt in the week, down considerably from the last several figures. With the big drop in treasuries bought, however, the combined buy of $8.396 billion of US obligations was quite a bit smaller than last week’s.

The raw-numbers graph shows continued divergence, but at a slackening pace compared with the last few weeks.

The downward trend in twist’s ratios graphs is also less intense than over the last few weeks.

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Notes and References

[1]: "Real-Estate Markets Still Plumb for Bottom", by Anton Troianovski, Wall Street Journal, January 2, 2009.

[2]: "Foreign c.bank Treasuries holdings up in week", by Burton Frierson, Reuters, January 2, 2009.

[3]: "H.4.1 Factors Affecting Reserve Balances", Federal Reserve Statistical Release (weekly), Federal Reserve Bank of New York.

[4]: The updated data set as a Comma Separated Value (CSV) file is here.

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