Major players from Japan and China dumped Treasuries three quarters in a row - is in fact the longest in the history of selling out - for AMarkets materials.
The last three months marked by particularly intense Closeouts Treasury debt.If sales continue, the market will be hurt. In the long run it will be even harder, given that the US sovereign debt is growing like a rabid - could easily increase by another $ 10 trillion in the next decade. Demand from non-residents - a key factor in controlling costs for servicing debt capital. And if the Fed does decide to go on increase in interest rates - a process indicated above will occur even more rigidly.
In connection with all these experts recommend to reduce the share of bonds in the portfolios of long and prefer short-term debt.
Currently, at the hands of foreigners $ 6.25 trillion of government bonds United States. Key holders - central banks. China - the biggest holder of US government debt. China in recent quarters has brought down the level of Treasuries in its portfolio to $ 1.22 trillion - a 3-year low. Japan, Saudi Arabia and other countries have also reduced their positions in Treasuries in the current year. Arabia has reduced the amount of US debt in their reserves to $ 96.5 billion in the last six months - the lowest since November 2014. The reason - the "patch up" budget hole in such a way, by ruthlessly cheap oil. Motivation of China to sell US government debt - to defend the yuan and its GDP. The sharp drawdown last immediately leads to an outflow of foreign money from the country. Motivation Japan - gain for the sale of treasuries cash dollars. Negative rates significantly raised the demand for USD in the medium of Japanese banks.
According to preliminary estimates of the Congress, the US deficit rose to $ 590 billion by the end of the fiscal year (September 30). This is the first annual increase, if you count from 2011. In the interval the next ten years a permanent lack of liquidity due to the rising costs of healthcare and social security will lead to a blow-up sovereign debt to $ 23 trillion. And this is just the start.
