Eyes turn to Russia on record drop in U.S. bond holdings

[bemildred]

Source: Reuters

(Reuters) - This week's record decline in foreign holdings of U.S. Treasuries has led some to speculate that Russia has been cutting its dollar reserves ahead of possible sanctions from the West due to its role in the Ukraine crisis.

Foreign central banks sold an eye-popping $104.5 billion in Treasuries this past week - more than three times the previous record. Suspicions have centered on Moscow, but it is possible that other major holders of U.S. debt, such as China and Japan, could have been big sellers as well.

"The speculation is that Russia is reducing its Treasuries holdings ahead of any possible sanctions," said Shaun Osbourne, chief foreign exchange strategist at TD Securities in Toronto. A definitive answer will not be available until official data on holdings is released in the next couple of months.

Russia held $139 billion in Treasuries, making it the 11th largest holder of U.S. government debt, at the end of 2013. The speculation is that Moscow, in efforts to support the rouble as well as shift away from U.S. assets to avoid sanctions, cut its holdings dramatically.

Read more: http://www.reuters.com/article/2014/03/14/usa-fed-russia-idUSL2N0MB0XR20140314?rpc=401&

[jakeXT]

1. Probably a combination of countries, China sold $50 billion recently

http://research.stlouisfed.org/fred2/series/WMTSECL1

[bemildred]

2. Nice chart. I would expect all sorts of people to be doing this.

And I (and others) said Russia would do this (if "the West" was not forthcoming about his concerns). So far we are still butt-covering, which seems to be the one thing we do well.

I sure hope that drone story is just Russian propaganda.

[amandabeech]

3. As the article points out, the yield on the 10-year has been declining,

meaning that some entity is buying that maturity.

[bemildred]

4. "Safe haven" buying seems likely in the circumstances. nt

[amandabeech]

6. Yes, and it's not just because of the Crimean situation.

CNBC and Bloomberg have been abuzz this week with weak numbers from China.

The latest involves Chinese firms going bankrupt and strong suspicions of re-hypothecation of collateral a la Jon Corzine in the Chicago debacle for which he should be drawn and quartered. Many Chinese businesses use a lot of copper as collateral. It turns out that the same copper has been pledged multiple times to multiple creditors, and the claims on the collateral exceed its value by 4 or 5 times. There's less concern on the Pacific Rim with Crimea than there is with the Chinese economy imploding.

Since the Pacific Rim is such a huge market, having it on edge at the same time as the West poses problems for everyone, including the Oligarchs. For those who don't know, and you're not one of them, Russia exports a lot of oil and gas to China and the east. Lower production in China means lower revenues for Russia, and more pain for the Russian stock market and its investors.

Next week could be extremely interesting.

Gotta run . . .

[bemildred]

8. See you next week. nt

[Sunlei]

5. Russia and China together, along with their major investor$ like romney, bushgangz & the kochs.

America should declare bankruptcy to get out of all those 'debts' somehow. Leave all of the above with empty pockets.

[geek tragedy]

7. hoarding cash to stay liquid. the plutocrats and state-owned enterprises

are facing margin calls next week. and their creditors won't be accepting rubles as payment

[Benton D Struckcheon]

9. Saw a report somewhere that Russian fx reserves went up,

...rather than down, which you'd expect from defending the ruble, which led to further speculation that maybe they bought a bunch of gold, which went up about 100/ounce since the invasion of Crimea, and would probably go up a lot more if they invade eastern Ukraine.
Machiavellian, amoral, and quite brilliant, if they did.

[bemildred]

10. Yes to both those points.

They have already said they would defend the Ruble, getting into the spirit of the dick-waving contest currently in process.

And I don't suppose they would publish all of their intended methods, or miss the opportunity to frontrun the markets.