Moody’s said in a report it doesn’t expect any downgrades of countries with triple-A ratings — the highest possible — in the "near future," adding that only a sustained increase in government debt over several years, which it doesn’t anticipate, would warrant such a decision. – WSJ¹

Well, the good news is that this week’s Reuters report² suggests if the US wants to sell a lot more debt, foreign central banks might not be in a mood right now to buy the stuff. 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 version⁴ of the agencies and treasuries foreign central bank holdings data set. The Puplava number barely budged. The Fed’s own holdings of mortgage-backed securities rose a mere $0.025 billion.

Cenbanks sold a modest but significant $3.003 billion of Treasury Debt last week. Could this sputtering pattern presage a top?

Agencies fell by $2.656 billion, just half a billion more than last week and continuing the pattern of a slow inexorable sell-off.

The combined sell-off of both flavors of US obligations erased all but $0.104 billion of last week’s net buy. Not much to show for all those indirect buyers being reported (see note 6 at link) on August 31st.

Twist’s ratios graphs, of course, were nearly perfectly flat for the week.

Setser’s 52-week change graph basically goes sideways this week. However, treasuries started a huge move to the sky 51 weeks ago. Expect to see the yellow line start nose-diving over the next month, as the red one is buoyed up by last year’s rapid dump of agencies in the same era. Rapid convergence is nearly inevitable.

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Notes and References

[1]: "Moody’s Says Triple-A Ratings for U.S., U.K. Not at Risk", by David Roman, Wall Street Journal, September 9, 2009.

[2]: "Foreign c.banks’ US debt holdings fall in week-Fed", by Richard Leong, Reuters, September 10, 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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