U.S. debt dump deepens in 2016



China, Russia and Brazil sold off U.S. Treasury bonds as they tried to soften the blow of the global economic slowdown. They each sold off at least $1 billion in U.S. Treasury bonds in March.

In all, central banks sold a net $17 billion. Sales had hit a record $57 billion in January.

So far this year, the global bank debt dump has reached $123 billion.

It’s the fastest pace for a U.S. debt selloff by global central banks since at least 1978, according to Treasury Department data published Monday afternoon.

Treasuries are considered one of the safest assets in the world, but some experts say a sense of panic about the global economy drove the selloff.

“It’s more of global fear than anything,” says Ihab Salib, head of international fixed income at Federated Investors. “There’s still this fear of ‘everything is going to fall apart.'”

Judging by the selloff, policymakers across the globe were hitting the panic button often and early in the year as oil prices fell, concerns about China’s economy rose and stock markets were very volatile.

In response, countries may be selling Treasuries to prop up their currencies, some of which lost lots of value against the dollar last year. By selling U.S. debt, central banks can get hard cash to buy up their local currency and prevent it from losing too much value.

The leader in the selloff: China.

“We’ve seen Chinese central bank foreign reserves fall dramatically,” says Gus Faucher, senior economist at PNC Financial. “Their currency is under pressure.”

Between December and February, China’s central bank sold off an alarming $236 billion to help support its currency, which China is slowly letting become more controlled by markets and less by the government. In March, China sold $3.5 billion in U.S. Treasury bonds, Treasury data shows.

Experts say the sell off may be slowing down now that global concerns have eased.

If anything, demand is still high for U.S. Treasury bonds — it’s just coming from private investors. The yield on a typical 10-year bond is just 1.76%, which is very low.


the so called safe haven is not seen as such by other countries..

“The leader in the selloff: China.”We’ve seen Chinese central bank foreign reserves fall dramatically,” says Gus Faucher, senior economist at PNC Financial. “Their currency is under pressure.”

why would they want stinky treasuries instead of gold?


~ by seeker401 on May 21, 2016.

7 Responses to “U.S. debt dump deepens in 2016”

  1. It’s the fear of “something?”
    What it’s the fear of is that the U.S. can’t pay back it’s massive debt without using hyperinflation, which is just another method of defaulting.

  2. rock, meet hard place …

    bearish pressure on treasuries puts upward pressure on interest rates. (simple supply-demand – if people are selling treasuries rather than buying, interest rates have to go up to make the treasuries more attractive.)

    but they can’t really raise interest rates. even the slightest hint of raised rates sends the stock market into a downturn. but low interest rates have failed to spark inflation and spending because the money just gets stuck in the banks.

    only one way out for the moneymongers: war.

  3. we are on the side of angels . . . (we are doing god’s work)

  4. The Donald is the TRUMP Card
    of the International Banking Cartel


    • Thanks, Rev.
      What’s the point of the “planned bankruptcy” of the US? What comes after the bankruptcy?

  5. Donald Trump is flat wrong about being the ‘King of Debt’


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