If there’s a technical term for what we’re presently seeing in this story arc it’s The Fog of Battle.[1] One thing is becoming clearer, though. Brad has found [2] that foreign central banks are increasingly at the short end of treasuries. That means if the yellow line ever starts to reverse, they’re mostly poised to get out of Dodge quite rapidly. This week’s Reuters report [3] waxed strangely poetic over the fact that foreign central banks are still buying Treasury Debt at all. Never mind that this week’s figure was down by nearly 2/3rds from last week’s. The report was, as usual, based on the weekly update from the NY Fed’s H.4.1 table site.[4] Here is Doom’s updated CSV version of the agencies and treasuries foreign central bank holdings data set.[5]

Central banks still did manage to buy a half-way respectable $7.940 billion in treasuries, but dumped a modest $3.504 billion in agencies. In the week, they were well below the billion-a-day+ uptake needed to support the US stimulus. Perhaps just a "breather" from the last couple of huge weekly buys.

The red line is getting silly. The net move so far this year for cenbank holdings of Agency Debt is the size of a typical Yonkers NY strip mall. Agencies are down a microscopic $8 million since Dec 31st. If somebody’s been contracted to offset the actual foreign selling of agencies, they’d better put some variance into their counter-buys. Five months of perfectly flat results aren’t going to fool anyone.





