Recent fears, warranted or not about the potential for retaliatory liquidation by China of its US Treasury holdings appear to have been exaggerated because according to the latest TIC data released, the trade-war enemy added $8.5 billion in TSYs in February (the most of any nation and the biggest monthly addition in six months)…
But while China, for now – given the lagged data, is still buying, two other notable nations are selling… significantly.
The second largest foreign US creditor, Japan, that has been liquidating in recent months, and in February, Japan sold $6.3 billion in TSYs (the most of any nation in February), bringing its total to $1,059.5BN, the lowest total since the start of 2012.
And along with Japan, Russia dumped Treasuries for the 3rd straight month to the lowest in a year…
Other notable holders were mixed:
- The United Kingdom added $7.2BN to $250.5BN
- Belgium, i.e. the proxy for China and other anonymous buyers, rose by $2.0BN to $125.7BN
- Cayman Islands, i.e. hedge funds, also added some $10.3BN to $252.2BN (the biggest jump since Dec 2015
All this Treasury buying (and selling) was during the chaotic swings of February’s fiasco in short-vol trades. But March will likely be the big tell as that’s closer to the beginning of escalating trade war tensions.