Foreign Central Banks Dump Treasuries as Their Share Collapses to a 33-Year Low
US Treasuries Have Become Unappetizing for Foreign Central Banks and Governments
Foreign central banks and governments have lost their appetite for US Treasuries. In July, their holdings fell to $3.77 trillion—roughly 2012 levels—while the outstanding Treasury market has tripled. Their share of marketable Treasuries has collapsed from over 38% at its 2007-2009 peak to just 12.8%, the lowest since 1993. Meanwhile, opaque financial centers like the UK, Cayman Islands, and Ireland now hold 35% of all foreign Treasuries, often on behalf of US hedge funds and companies.
Treasury securities have become increasingly unappetizing for foreign central banks and governments.
- 1over137
US everything has become unappetizing for everyone outside the US.
- Arubis
Dedollarizing the world economy has more net losers than the US (though that's the obvious one).
It's not without its benefits -- over the last couple decade, the US has found ways to weaponize access to USD, so if you're not a fan of having a country other than your own able to effectively regulate or sanction you and your business, there's some niceties here.
Being able to trade and invest in a stable, highly liquid, easily converted, low risk currency was a net win for most of the world for about half a century. There isn't an obvious replacement, so we'll just see more friction.
- kelnos
Looking at the graphs in the article, I don't think the overall picture supports the headline...
- jandrewrogers
I think the more interesting story is the long-term decline in the quality of virtually all sovereign debt. Many things are anchored to the assumption that high-quality sovereign debt is widely available.
- thehumanmeat
The article couldn't be less true. Treasuries are the deepest and most liquid market by far. Foreign CBs hold them so that they can liquidate them when it becomes hard to find dollars. Why else do foreign CBs want to constantly open up swap lines to us when they are hurting?
- nephihaha
There seems to be a strong attempt to unseat the USA and the dollar right now. BRICS has tried to, China and Russia would love to and it looks like the EU may follow suit.
The question as always is what to replace it with, and hopefully not something worse.
- octoberfranklin
Treasuries Have Become Badly Unappetizing for Foreign Central Banks & Governments
"Badly" is used to modify participial adjectives ("written", "organized"), not plain property adjectives like "unappetizing".
But seeing Wolf Street on HN brightened my day.
- csomar
The issue (real issue?) is that it’s unclear whether these governments reduced their holdings or switched them to these opaque structures (tether can be considered one). The idea is, it would be hard for the US to untangle true ownership. I wonder if UBO was getting undone blue or red because it’s a real threat for such a system but the US needs this “second” lifeline.