… there is still sturdy demand for Treasuries from abroad; foreigners refused to dump them even when they lost confidence in mortgage-backed debt last year. But America cannot take things for granted. 
The full Economist article has a lot more nuance, but the underlying message is clear. Something is up.
This week’s Reuters report  reverts to recent form after last week’s a trend-busting reversal. However, the total of Treasury & Agency Debt held by foreign central bank rose just $2.661 billion in the week. That’s clearly not enough to support all the contemplated T-bill sales in the medium term, so Doomers should watch over the next while to see if that number bounces back. Treasury Debt holdings did rebound to a healthy buy of $8.664 billion, but this was cut down to size by a largish $6.004 sell-off in agencies. The Reuters report was picked up by Forbes. I don’t recall seeing that one before, and it may indicate a rise in interest about this story. The report was, as usual, based on the weekly update from the NY Fed’s H.4.1 table site. Here is Doom’s updated CSV version of the agencies and treasuries foreign central bank holdings data set.
If you compare the above treasuries with the below agencies bar graphs you’ll see that the increase in total cenbank holdings has been barely above stall speed over about the last month. Thanks once more for all of Twist’s hard work on these charts and graphs. They add a lot of context to the bare story that Reuters usually transcribes.
Modest divergence in the raw-numbers graph has returned.
It’s possible last week’s reversal was a blip. Doomers should watch to see if recent trends re-establish themselves, or if the trends manage to shake themselves into a new configuration.
Notes and References: "American Treasury bonds: Too much of a good thing — A wave of new borrowing threatens a port in a storm", Economist (subscription), February 5, 2009.
In the trouble-tossed world of finance, the one safe place during the credit crisis has been America’s vast and liquid Treasury-bond market. No longer. Since touching a record low of 2.04% in mid-December, ten-year bond yields shot up above 2.9% on February 4th, continuing a sell-off that made January the worst month for government securities in decades.
: "Foreign central banks’ Treasury holdings up – Fed", by Burton Frierson, Reuters, January 9, 2009. : "H.4.1 Factors Affecting Reserve Balances", Federal Reserve Statistical Release (weekly), Federal Reserve Bank of New York. : The updated data set as a Comma Separated Value (CSV) file is here.