"The world does not have so much money to buy more U.S. Treasuries." – deputy governor of the People’s Bank of China Zhu Min4

Meanwhile there’s heavy action coming from the agencies side, too.5 As Jan-Martin often says, "I am without words …"

But the numbers, as usual, moved opposite to the rhetoric. The Fed itself significantly increased its own MBS holdings, by a big $46.918 billion. This week’s Reuters report1 was, as usual, based on the weekly update from the NY Fed’s H.4.1 table site.2 Here is Doom’s updated CSV version3 of the agencies and treasuries foreign central bank holdings data set.

Treasury Debt came roaring back, adding $15.645 billion

The agencies buy was modest, but at $1.303 billion a bit bigger than many recent weeks.

This week the total US obligations number surged back, adding $16.948 billion.  Two more weeks like this and we’d nearly be at $3 trillion total for the end of the year.  Note that if both these lines do ever peak and start heading south there’s a long way to drop.

Twist’s ratios graphs, in yet one more turn-around, slipped down a bit.

Again both lines in the Setser 52-week chart converged strongly, as we’re at the anniversary of a big agencies dump and a huge treasuries buy.  It’s that downward trend at the very end of the yellow line below which is what dep. gov. Zhu was speaking to at the top of this post.

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Notes and References

[1]: "Foreign central bank U.S. debt holdings rose – Fed", by Ellen Freilich, Reuters, December 17, 2009.

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

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

[4]: "China c.banker: harder for govts to buy U.S. Treasuries", by Zhou Xin and Jason Subler, Reuters, December 17, 2009. [twist sent this Freedom's Phoenix find around the Castle yesterday with a sticky-note reading ... think this is important ... I concur]

[5]: "Big Decision Looms on Fannie, Freddie", by Nick Timiraos and James R. Hagerty, Wall Street Journal / Yahoo Finance, December 16, 2009. [big hat tip to L for this dig]

Meanwhile, the government is also facing pressure to reconsider requirements that Fannie and Freddie begin shrinking their combined $1.6 trillion portfolio of mortgages next year given the fragile state of the mortgage market. Some investors worry that private investors may not be able to fill the gap as the Federal Reserve winds down its $1.25 trillion in purchases of mortgage-backed securities.