U.S. Treasuries: Not Finding Much Love in Foreign Lands

This is a syndicated repost courtesy of True Economics. To view original, click here. Reposted with permission.

Follow the money. Find the profits!

Liquidity is money. Regardless of where in the world that money originates, eventually it flows to and through Wall Street. So if you want to know the direction of the next big moves in stocks and bonds, just follow the money. Lee Adler's Liquidity Trader tracks and shows you the monetary forces that drive markets, like the daily real time Federal Withholding taxes shown in this chart. Follow the money. Find the profits! Try it for 90 days, risk free!

In recent months, I have been warning about the cliff of new bonds issuance that is coming for the U.S. Treasuries in 2019, pressured by the declining interest in U.S. debt from the rest of the world. December 2018 figures are a further signal reinforcing the importance of this warning (see U.S. yields comparatives here: http://trueeconomics.blogspot.com/2019/02/15219-still-drowning-in-love-for-debt.html).

Liquidity moves markets!

Follow the money. Find the profits! 

In December 2018, foreign buyers cut back their purchases of the U.S. Treasuries by the net USD77.35 billion, following a net increase in purchases in November of USD13.2 billion. December net outflow was the largest since January 1978. On a positive note, Chinese holdings of U.S. Treasuries increased in December, after declining for six straight months. China held USD1.123 trillion in U.S. Treasuries in December, up from USD1.121 trillion in November.

Try Lee Adler's Technical Trader risk free for 90 days!  Subscribe before March 19 and get 20% off the regular price. Follow the money. Find the profits!

Here is the historical chart, including 4Q 2018 estimate:

Not quite an armageddon, but statistically, foreign holdings of the U.S. Treasuries remained basically flat from 1Q 2014. Which would be fine, if (1) U.S. new net issuance was to remain at zero or close to it (which is not the case with accelerating deficits: http://trueeconomics.blogspot.com/2019/02/15219-nothing-to-worry-about-for-those.html), (2) U.S. Fed was not ‘normalizing’ its asset holdings (which is not the case, as the Fed continues to reduce its balance sheet – see next chart).

Note: January 2019 saw a decline in the benchmark U.S. Treasuries (10 year) yield, compared to 2018 annual yield:

 

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.