Last updated:December 30, 2011 7:20 pm
Foreign central banks cut US treasuries
By Michael Mackenzie in New York
Holdings of US Treasuries by foreign central banks has fallen by a record amount over the past four weeks according to the latest Federal Reserve data.
The net $69bn drop in Treasury holdings registered at the Fed by foreign official institutions comes as benchmark yields ended 2011 near record low levels and when the US central bank is conducting Operation Twist, its $400bn programme to sell shorter-lived Treasury bonds and buy those with longer maturities.
The decline in foreign holdings of Treasuries in recent weeks has not resulted in higher yields and lower prices because other investors have sought the safety of US debt.
“Given where the 10-year Treasury is ending the year, it’s difficult to say the flows are a bearish move,” said Ian Lyngen, strategist at CRT Capital