…gears, and just for fun consider this recent huff from the land of Cockney rhyming slang:
Economist (12/28 ’11): Lexington — “Ron Paul’s big moment”
… Even if he wins in quirky Iowa, Ron Paul will never be America’s president. But his coming this far tells you something about the mood of Republican voters. A substantial number like a man who wants to abolish the Federal Reserve, introduce a new currency to compete with the dollar, eliminate five departments of the federal government within a year, pull out of the United Nations and close all America’s foreign bases, which he likens to “an empire”.
Ya think? … But meanwhile that Fed windmill (as pictured in the article) had better be on it’s toes, the breeze is looking a wee bit changeable 
The Fed’s own holdings of MBS fell a substantial $14.431 billion and agencies were flat, but foreign central banks continued to run screaming from the room divesting themselves of the second biggest wad of treasuries ever. Twist shares this link to Tyler’s reaction, and a really cool moving average chart:
ZeroHedge (12/30 ’11): “Foreigners Dump Record Amount Of US Treasurys In Past Month”
… As the Fed’s critical H.4.1 weekly update shows (which is leaps and bounds more accurate than the Treasury’s TIC international fund flow data), in the week ended December 28, foreign investors sold the second highest amount of US bonds in history, or $23 billion, bringing total UST custodial holdings to $2.67 trillion, a level first crossed to the upside back in April. This number peaked at $2.75 trillion in mid-August, and as the chart below shows the foreign holdings of US paper have been virtually flat in all of 2011, something which is in stark contrast with what the price of the 10 Year would indicate vis-a-vis investor demand. …
This week’s Reuters report1 (welcome back, weathermen 
) 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.
Treasuries collapsed to the tune of $23.014 billion, and you can see that many of the other big dumps over the last decade have also occurred quite recently.
Agencies barely moved, gaining just $0.172 billion (which doesn’t even register on the chart) after last week’s huge growth.
*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 plunged $22.842 billion, with is over three billion dollars a day.
Twist’s ratio graphs continued to streak up.
The Setser numbers maintained their strong convergence. With agencies pretty static and the treasuries number visiting territory first seen, as Tyler noted, in early spring ’11 the two lines might actually cross around or even below zero.
________________________
Notes and References
[1]: “Foreign central banks’ U.S. debt holdings fall: Fed”, by Steven C. Johnson, Reuters, December 29, 2011.
[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 (includes Fed’s own MBS holdings).
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Did you see that the FT has picked up this story as well? Apparently the numbers would have been even worse, had it not been for all the purchases by Japan last fall.
http://www.ft.com/cms/s/0/67af8efc-3301-11e1-8e0d-00144feabdc0.html?ftcamp=rss#axzz1i4KpLgvA