As there are many positives to a weaker [US Dollar] ahead that would be a great relief to both the Fed and Obama administration, the USD may end up being the sacrificial lamb to help reflate once more our economy and stock market. … 
Yesterday I was reading Chris Puplava’s article at  and as you can see from the above letters-of-fire it does give some possible insight into whether the foreign central banks’ treasuries holdings may be peaking; however, …
What really has us excited at Doom Castle is his second chart (go to the original for a better view).
On January 14, 2009, and for the first time ever, the Fed reported direct holdings of agency debt. The level has grown rapidly since then. The above graph is simply the chart of the amount vs time in the H.4.1 updates, and Housing Doom blog is pleased to present our first weekly version of the H.4.1 data set with Puplava’s numbers as a third column. Thanks go to Chris also for a hint about which line to look at in the H.4.1 table.
Not real exciting at first glance, but it could well be the smoking gun clue to the Tube of Bogosity mystery we’ve been following all year in the cenbank agency holdings trend. Simply put, it sure looks to me like a big wad of those Fed agencies holdings could be getting conveyed somehow into the cenbank number. That is, the Federal Reserve may have become in some sense an honorary foreign bank. I see no other likely explanation for the red-line anomaly we’ve been tracking.
UPDATE (8/8): Rich’s guest poster at Piggington’s  adds significantly to the discussion (emphasis in the original):
More worrisome is the fact that this mortgage debt is purchased by Bernanke’s printing machine. For the first half of 2009, the Federal Reserve has purchased $621b of agency MBS, at the pace of over $20b per week. http://www.newyorkfed.org/markets/mbs/purchasesarchive/purchases_archive.html
Using data above, I am estimating that GOVERNMENT CONTROLLED FINANCING HAS A WHOPPING >80% MARKET SHARE> of mortgage financing and THE FEDERAL RESERVE IS PURCHASING OVER 60% OF THESE MORTGAGES. The significance of the government’s role in financing is unprecedented and grossly under appreciated.
Returning to our routine weekly fare, this week’s Reuters report  recorded a lusty Top 10 increase in Treasury Debt holdings and another modest but significant drop in the agencies figure. 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.
Treasuries rose a huge $25.427 billion, the 6th biggest weekly increase to now. Curiously at odds with recent news reports about the T-bill marketplace, not to mention the drift of Puplava’s article, but welcome support for the Administrations present and future bailout plans.
The slide down in agencies may be accelerating. This week the figure dropped $6.557 billion, but check out the picture in our good old raw numbers chart when we add the Puplava numbers. As usual, twist turned herself inside out at short notice and exercised amazing psychic powers converting my garbled instructions into something we hope Doomers will find informative.
The bottom line simply superimposes the above Fed MBS holdings chart onto our original raw numbers chart. The additional series, "Agen-FM" == "Agencies reduced by FEDMBS", is a bit of an editorial comment. I’m guessing that much of FEDMBS somehow got conveyed into the Agencies bin to help prop up the red line. The new line is then something of a proxy for where I imagine a "real" red line would have gone over the first half of this year if this presumed action hadn’t occurred.
CAVEAT: The only tools I used to fabricate the above argument were the NY Fed’s own numbers and a couple of Mark 1 Mod 0 eyeballs (with some critical technical assistance from my friends!). Durn’d if I know how that red line could have stayed horizontal through H109 without enrichment from the Fed’s own MBS holdings, but that being said there’s no way I’ve conclusively excluded other possibilities. Nevertheless, I submit that if Congress ever gets that Fed audit they want, the folks who carry out the task might like to have a look at the above chart and the numbers that underlie it.
Twist’s ratios graphs click down strongly. We’re talking about an absolute difference in the two numbers of nearly $32 billion.
Setser’s 52-week change graph didn’t move very far (sharp-eyed Doomers will have noted that #7 in the Treasuries Top 10 was exactly 52 weeks ago!). It’s too bad Brad’s left the blogging business as it looks like things were just about to get interesting again 😉
Notes and References
: "The Sacrificial Lamb?", Chris Puplava, FinancialSense, August 5, 2009.
: "Foreign c.banks US Treasury holdings up in week – Fed", by Chris Reese, Reuters, August 6, 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.
: "Has real estate bottomed?", by Ramsey Su, Piggington’s, August 7, 2009.