Mr Bond, they have a saying in Chicago: “Once is happenstance. Twice is coincidence. The third time it’s enemy action.” (Viewers should note…this line is generally cut from British showings of Goldfinger on advice from British security services, as it is one of their own training maxims.) – Auric Goldfinger
By yesterday noon the amero gap had collapsed all the way to -1 bp before relaxing a bit to close at -29 bp. ” ‘UK’ treasuries buyers” anyone? As luck would have it, I’ve just gotten to the point (387) in Frances Stonor Saunders’ “The Cultural Cold War” where Christopher Hitchens (and Saunders) is mercilessly ridiculing biographer Iggy’s efforts to defend Isaiah Berlin’s honour in the Encounter affair. Which at least made me realize why, at Wednesday night’s (excellent) Chris Hutchinson reading, I completely fluffed the poet’s name asking him to expand on his rather startling word-pictures of Phoenix AZ at the cusp of the housing bubble, when he was at ASU. But it also reminded me why I’m so transfixed with the Mark & Jim show (central banker and finance minister suddenly putting the fear of God into our country’s mortgage borrowers) and how that’s likely to tank the recovery and put Fearless Minority Leader out of a job.
This week the Fed’s own holdings of MBS fell a significant $11.984 billion, but in a move like we haven’t seen in months the agencies number surged up by close to that figure. This leaves me wondering whether the central banks might all be working under the regime of a truly industrial strength version of the former rule SFAS 140, giving them the potential to do some sort of Repo 105 on steriods among themselves.
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.
The net change in treasuries in the 9 weeks from 11/17 ’10 stands at down $11.906 billion, which fact alone was enough for Igor to fly off last evening on an emergency mission to locate Harry Reid’s black tie; this is a heck of a time to be snubbing Mr. Bondholder at fancy parties.
The Treasury Debt shrinkage was another substantial $9.095 billion, nearly matching last week’s sell-off.
Agencies blasted up $10.836 billion. Where the heck did that come from?
*Agen-FM: The dotted line is the foreign central banks’ Agency Debt holdings reduced by the level of the Fed’s own MBS holdings. Since the FRBNY itself is a lightly audited peculiar amalgam of foreign & domestic, central and private bank I think it might be useful to consider the hypothesis that for a while starting in January 2009 the Fed’s MBS holdings were being quietly deemed to be “foreign.” That is, for the first half of ’09 the dotted line seems more sensible than the red one.
The net of US obligations held rebounded a modest $1.741 billion, saved by the surprising buying spree in agencies. This number has risen just $3.287 billion in the nine weeks since last November 17th, but at least it’s still in positive territory.
Twist’s ratio graphs surged up this week.
Both Setzer graph numbers converged strongly on the flat anniversary numbers.
Notes and References
: “Foreign central banks’ US debt holdings rise – Fed”, by Nick Olivari, Reuters, January 20, 2011.