So are Zhou and Dudley leading a Committee To Save The World? … from their own governments?? Twist contributes this link to a fascinating story showing that China now has direct access to treasuries. Note especially the references to Brad Setser’s (yeah, same guy 😉 ) commentary from just before he got hoovered up into the Administration about three years ago, silencing him as a blogger. This week’s numbers would tend to suggest there are important under-the-covers forces trying to keep those setser numbers from falling too far below zero (or in the case of treasuries reaching zero at all).
The Fed’s own holdings of MBS again popped, this time by a further $6.756 billion, while the foreign central banks’ holdings of agencies swung to a shocking level of growth after a long losing streak.
This week’s Reuters report1 is, 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 treasuries number stayed positive with a modest $3.877 increase.
Agencies added $12.965 billion, more than twice the amount of last week’s ominous deterioration and the biggest pop since the dying days of the housing bubble in early ’08.
*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 slammed up $16.841 billion, erasing the recent damage. The recent rebound in the green line may be telling us that a lot of this week’s fresh surge in “foreign” demand for agencies could be coming straight from San Juan PR, but without a Fed audit we’ll never know.
Twist’s ratio graphs scrambled back up from their recent retreat.
The Setser numbers both rode a bottle rocket this week on especially weak anniversary results. That should be a bit of a confidence booster, as Brad’s old graph is likely still being followed by some people who matter in the world.
Notes and References
: “Foreign central banks’ US debt holdings rise – Fed”, Reuters, May 24, 2012.