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China, Japan Boost U.S. Bond Buying to Record Highs
The Wall Street Journal ^ | Jan 16, 2014 | Min Zeng, Eric Morath

Posted on 01/16/2014 10:06:13 AM PST by 1rudeboy

Demand Should Contain Pace of Rise in Bond Yields, Keeping U.S. Borrowing Costs in Check

China and Japan boosted their holdings of Treasury bonds to a record high in November, a sign two of the biggest foreign investors in the U.S. government debt market haven’t fretted about the rise in long-term interest rates.

The activities of foreign investors are highly scrutinized at a time when Treasury yields have climbed over the past year and bond prices have fallen on the prospect that the Federal Reserve would wind down its bond buying this year. Analysts said steady demand from foreign investors would help contain the pace of rise in bond yields, keeping long-term borrowing costs for U.S. consumers and businesses in check.

China added $12.2 billion in Treasury debt in November to $1.3167 trillion, according to the latest monthly capital flows release from the Treasury Department. It surpassed the previous peak of $1.3149 trillion set in July 2011, according to analysts.

Japan increased its holdings by $12 billion in November to $1.1864 billion. The Fed currently owns more than $2 trillion Treasury debt, bigger than any other investors in the $11.8 trillion Treasury bond market.

“While foreigners won’t be the sole source of buying when the Fed reduces its purchases, foreign demand should prevent U.S. rates from rising too quickly,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, which oversees $11 billion in fixed-income assets.

A portion of Thursday’s Treasury International Capital report was released early.

“Due to an error, limited amounts of TIC data were posted on the Treasury website ahead of the official release,” Treasury said in a statement. “As soon as the error was discovered the data was removed.”

Despite the glitch, the release helped boost Treasury bond prices Thursday.

(Excerpt) Read more at stream.wsj.com ...


TOPICS: Business/Economy; Foreign Affairs; Front Page News; Government; Japan; News/Current Events
KEYWORDS: china; goldbugs; japan; wearedooooooooooomed

1 posted on 01/16/2014 10:06:13 AM PST by 1rudeboy
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To: 1rudeboy

Recall ~ 20 years ago POTUS’s including GHWB and Clinton were terrified that interest rates would jump up if they ran up too much debt. But no more because of stuff like this.

This could also indicate that those countries see a crash coming.


2 posted on 01/16/2014 10:09:30 AM PST by sickoflibs (Obama : 'If you like your Doctor you can keep him, PERIOD! Don't believe the GOPs warnings')
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To: 1rudeboy

In November the Chicoms said they would not be net buyers anymore. They lied.

They are the other half of this codependent debt relationship.


3 posted on 01/16/2014 10:11:07 AM PST by NeoCaveman (DC, it's Versailles on the Potomac but without the food and culture)
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To: sickoflibs
I had a thought that China and Japan were doing it to make us crash, but then I wondered if there are more efficient and less expensive ways to do it, if that is their plan.
4 posted on 01/16/2014 10:11:44 AM PST by 1rudeboy
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To: 1rudeboy

really strange if the ChiComs are continuing to buy these bonds...
their deputy minister has made several highly pointed (and most uncharacteristic, therefore deliberate) critical statements about the poor quality of these investments and how China loses value and is thus subsidizing the American government’s reckless spending binges, etc., and ... that China should pare back its existing portfolio of such holdings.

they are very unhappy, they obviously do lose a lot of value buying paper that pays 2 or 3 percent but depreciates in real purchasing power at maybe 6 to 10 percent, per year.

China obviously has many other places it can invest its surplus dineros, too......

——?


5 posted on 01/16/2014 10:23:03 AM PST by faithhopecharity (C)
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To: 1rudeboy

This has to be orchestrated by the NWO cabal. I guess they need more time to get their ducks in a row before green-lighting the collapse.


6 posted on 01/16/2014 10:23:26 AM PST by MichaelCorleone (Jesus Christ is not a religion. He's the Truth.)
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To: NeoCaveman
In November the Chicoms said they would not be net buyers anymore. They lied.

The Chicoms can say what they want but as long as they want to keep the Yuan (Renminbi) undervalued relative to the dollar they must buy US dollars, i.e., US Treasuries. If they did what they preached the Yuan will go up in value relative to the $ making Chinese exports more expensive wrecking their export oriented economy.

7 posted on 01/16/2014 10:24:26 AM PST by C19fan
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To: MichaelCorleone

And, you are correct. A collapse must be evident because it makes no economic sense to purchase more bonds of a nation already in massive debt...unless


8 posted on 01/16/2014 10:30:21 AM PST by SeminoleCounty (Amnesty And Not Ending ObamaCare Will Kill GOP In 2014)
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To: SeminoleCounty

When the collapse lever is pulled by China and civil unrest and mass chaos ensues within the United States, after the smoke clears, China gets first dibs on intervening with their troops, then planting their flag on our soil.


9 posted on 01/16/2014 11:29:22 AM PST by CivilWarBrewing
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To: faithhopecharity

The Chinese and Japanese are embroiled in their dispute over some rocks in the China Sea. So they both buy a lot of U.S. Bonds. Seems like one side is trying to buy our support, and the other trying to buy us off.


10 posted on 01/16/2014 1:27:56 PM PST by henkster (Communists never negotiate.)
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To: henkster

I guess they figure those rocks have gas and oil under them


11 posted on 01/16/2014 1:30:12 PM PST by faithhopecharity (C)
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To: NeoCaveman

They are the other half of this codependent debt relationship.


We got their crap merchandise and they got our crap dollars.

What else are they going to do with those dollars except buy bonds which are just another form of those dollars.


12 posted on 01/16/2014 1:51:57 PM PST by PeterPrinciple
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To: faithhopecharity

It’s the same the world over - the elites keep their place in line via political power that let’s them spend our money, screw up our economy, and profit from it.

The Chinese elites look around and realize that they have more in common with the American crony capitalists than they do with their own people.


13 posted on 01/16/2014 2:18:11 PM PST by 1010RD (First, Do No Harm)
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To: 1010RD

well, those Communist China “elites” do seem to feel some sort of connection with their American conterparts. Tens of thousands of those elites from Communist China are buying American houses (in the most expensive neighborhoods, the high prices largely the result of these mostly all-cash ChiCom buyers, ironically )....

of course, the rest of the housing market is (for the most part) still badly depressed (as so many Americans are losing their jobs.... and most people still employed cannot possibly afford ....)


14 posted on 01/16/2014 2:24:06 PM PST by faithhopecharity (C)
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To: henkster

“The Chinese and Japanese are embroiled in their dispute over some rocks in the China Sea. So they both buy a lot of U.S. Bonds. Seems like one side is trying to buy our support, and the other trying to buy us off.”

What you have described is a continuing Viagra type wet dream for US bond sellers.


15 posted on 01/16/2014 2:27:13 PM PST by Grampa Dave ( Obamacare is a Trinity of Lies! Obamaganda is failing 24/7/365! Obamaganda will fail 24/7/365!)
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To: Grampa Dave
What you have described is a continuing Viagra type wet dream for US bond sellers. That would be the government of the United States, too. And if I assumed the 0bama regime knew what it was doing, I would say this was a plan to keep the pot stirred so we could sell our debt. But since I don't think our regime has a clue, I'll just chalk it up to serendipity.
16 posted on 01/16/2014 2:31:16 PM PST by henkster (Communists never negotiate.)
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To: 1rudeboy

China and Japan continue to buy our G bonds.

Germany and ? countries have stored their gold in America.

Whenever, there is a potentially severe international crisis or incident, money flows into our G bond ETFs and broad market Stock ETFs. This recent trend is probably why Gold’s prices have tanked in the past couple of year.

Why?

In spite of congress and Obozo, America is still probably the safest haven to park money at/in during a financial crisis.

That could change anytime, but where can the very rich park their large sums with the safety and mobility we have in America via our G Bonds and market type ETF’s like DVY/SPY?


17 posted on 01/16/2014 2:36:05 PM PST by Grampa Dave ( Obamacare is a Trinity of Lies! Obamaganda is failing 24/7/365! Obamaganda will fail 24/7/365!)
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To: faithhopecharity

BOL: “ Communist China “elites” do seem to feel some sort of connection with their American conterparts. Tens of thousands of those elites from Communist China are buying American houses (in the most expensive neighborhoods, the high prices largely the result of these mostly all-cash ChiCom buyers, ironically )....”

This past summer we refied our home to keep it in shape until they cart us out feet first at a much later date, we hope:).

During this process, I got to know the local bank leaders and got some interesting data.

Through September, ie, the first nine months of 2013, home prices in the snobby wino country shot up. Good homes that went up for sell often had bidding wars.

Through September of 2013, the largest number of cash buyers came from two areas:

Drumroll!

1. Surprisingly, #1 re cash buyers was Texas.

2. Number 2 and rapidly gaining were Asians from their home countries with China as the #1 Country in the second group.

The new Asian home owners seem to be evenly split between part timers here and new full timers in their new homes.

I don’t have the data on 2013’s last quarter, but it could well be the Asians/Chinese are the #1 buying group.


18 posted on 01/16/2014 2:49:14 PM PST by Grampa Dave ( Obamacare is a Trinity of Lies! Obamaganda is failing 24/7/365! Obamaganda will fail 24/7/365!)
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To: henkster

“What you have described is a continuing Viagra type wet dream for US bond sellers. That would be the government of the United States, too. And if I assumed the 0bama regime knew what it was doing, I would say this was a plan to keep the pot stirred so we could sell our debt. But since I don’t think our regime has a clue, I’ll just chalk it up to serendipity.

Serendipity, blind luck or good luck in spite of them selves is probably the best answer.

In spite of their bungling and attempts to run America, we still remain the safest place to live and store your money.

Of course the Obozos an Obozettes will try to take credit like the Clintoons did after they got reamed out by the Republicans after a critical election.


19 posted on 01/16/2014 2:53:15 PM PST by Grampa Dave ( Obamacare is a Trinity of Lies! Obamaganda is failing 24/7/365! Obamaganda will fail 24/7/365!)
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To: SeminoleCounty
A collapse must be evident because it makes no economic sense to purchase more bonds of a nation already in massive debt...unless

I don't understand how buying more debt from a nation about to collapse under too much debt is going to protect China from said collapse. An explanation would be helpful.

20 posted on 01/16/2014 3:39:26 PM PST by TwelveOfTwenty (See my home page for some of my answers to the left's talking points.)
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; cardinal4; ColdOne; ...

Thanks 1rudeboy.


21 posted on 01/16/2014 4:39:55 PM PST by SunkenCiv (;http://www.freerepublic.com/~mestamachine/)
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To: faithhopecharity

Or air routes and sea control, around & over them...?

If the USSR had been able to place permanent missiles just off the U.S.A coastline, we would have been more uncomfortable.

Besides resources, simple physical geographical control may also be important.


22 posted on 01/16/2014 7:31:04 PM PST by mbj (Making good people helpless doesn't make bad people harmless.)
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To: 1rudeboy

Japan and China are threatening war with each other. With each country stepping up their buying of US bonds, they are each hoping that the US will continue to think of each them “fondly” and will chose their side as in the case of Japan or will stay neutral as in the case of China.

Just my opinion...


23 posted on 01/17/2014 4:13:06 PM PST by mdmathis6 (Secret Societies are like Sasquatch, you never catch one but they do leave footprints!)
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To: NeoCaveman; 1rudeboy; sickoflibs; faithhopecharity; C19fan; SeminoleCounty; CivilWarBrewing; ...

In November the Chicoms said they would not be net buyers anymore. They lied.

They are the other half of this codependent debt relationship.
............
The Chinese — before that announcement — had not been net buyers of US bonds for almost two years.

What this Chinese purchase means is that a profound shift of sentiment about the future of the USA has crossed the Pacific. Basically the Chinese have figured out what the world’s greatest currency manipulator, George Soros has figured out. Soros hates gold and loves the US economy. The US economy is picking up steam, the US federal and trade deficits are shrinking, oil output is increasing, the US economy is now much stronger than Europe and Japan. Federal reserve is tapering. All that means that the next secular trend for the dollar is UP.

That means that all dollar denominated assets rise in value. The Chinese and the Japanese each figure that buying US treasuries is now the safest bet around to pad their reserves


24 posted on 01/17/2014 4:33:33 PM PST by ckilmer
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To: ckilmer
Perhaps their is a counterfactual you've not considered? They're so dependent on America's economy keeping them in power that it's worth helping the game along, at least until the music stops.

Have you listened to this?:

It's really horrendous because the true debts of the country total about $205 trillion. The official debt that's being reported is only about $12 trillion--it's in the hands of the public, the debt in the hands of the public. So we're missing the vast majority of the obligations. And this $205 trillion 'fiscal gap', which is what economists refer to this as, which is all the liabilities to paying my mom's Social Security benefits, your grandmother's Social Security benefits, etc., all the Medicare, Medicaid, other spending obligations--defense spending, paying for the President's lunch--those are all obligations. They are going to have to be paid. And then if we net out all the future taxes that are going to be coming in as projected, in both cases by the Congressional Budget Office (CBO), when you see in present value, the value in the present of this net obligation being $205 trillion. So we are in terrible shape. Our GDP (Gross Domestic Product), the national output that we produce, is about $17 trillion--we are talking about $205 trillion, which is many times a single year's GDP. We would have to raise taxes by close to 60% immediately and permanently, every single Federal tax, to come up with $205 trillion in present value. So the country really is bankrupt and nobody sees it because of the bookkeeping.

25 posted on 01/17/2014 6:47:25 PM PST by 1010RD (First, Do No Harm)
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To: ckilmer

Except for a handful of sectors or localities I must disagree with the idea that the USA economy is recovering. That’s just not correct I wish it was. About all we have us faked lies for government economics data While that same govt is doing everything imaginable to plunge the economy deeper and deeper into depression.


26 posted on 01/17/2014 6:49:13 PM PST by faithhopecharity (C)
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To: faithhopecharity

Except for a handful of sectors or localities
.........
Its those sectors and localities that make all the difference...at least as far as finances are concerned.


27 posted on 01/17/2014 9:15:25 PM PST by ckilmer
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To: 1010RD

It’s really horrendous because the true debts of the country total about $205 trillion.
...........
well my understanding is as imperfect as the next persons. But you have to figure that when the biggest vampire mercenary in the world George Soros has confidence in the US economy but is pessimistic about China...then what the hey—chinese investments in US bonds make more sense.
....................
George Soros On The World’s Shifting Challenges
In contrast to Europe, the United States is emerging as the developed world’s strongest economy. Shale energy has given the US an important competitive advantage in manufacturing in general and in petrochemicals in particular. The banking and household sectors have made some progress in deleveraging. Quantitative easing has boosted asset values. And the housing market has improved, with construction lowering unemployment. The fiscal drag exerted by sequestration is also about to expire.

The major uncertainty facing the world today is not the euro but the future direction of China. The growth model responsible for its rapid rise has run out of steam.

That model depended on financial repression of the household sector, in order to drive the growth of exports and investments. As a result, the household sector has now shrunk to 35% of GDP, and its forced savings are no longer sufficient to finance the current growth model. This has led to an exponential rise in the use of various forms of debt financing.

http://www.zerohedge.com/news/2014-01-02/george-soros-worlds-shifting-challenges


28 posted on 01/17/2014 9:45:54 PM PST by ckilmer
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To: 1rudeboy
Could it be that the Fed is cutting back, by 10 billion per month, what they were buying every month in Bonds and T-bills and the difference is going to be made up by China and Japan? Fed has been buying approx 90 billion PER MONTH for the past 2 years

The house of cards must stay propped up until Janet Yellon can be blamed for the oncoming train wreck.

29 posted on 01/17/2014 9:58:24 PM PST by VideoDoctor
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To: ckilmer

That means that all dollar denominated assets rise in value. The Chinese and the Japanese each figure that buying US treasuries is now the safest bet around to pad their reserves


But the counter to that is if you buy bonds and the interest rates go up, you bonds are worth less. on the other hand if they are short term bonds which is most likely you reinvest when int rates are higher.

Nothing is ever certain with climate or people or finance..........but place your bet.


30 posted on 01/18/2014 8:50:15 AM PST by PeterPrinciple
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To: PeterPrinciple

on the other hand if they are short term bonds which is most likely you reinvest when int rates are higher.
..........
I think these are what they are buying.


31 posted on 01/18/2014 11:41:13 AM PST by ckilmer
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To: 1rudeboy

As someone worried about the stability of the US financial system, all I can say is, “Bwahahahaha.”


32 posted on 01/21/2014 4:14:06 PM PST by Pearls Before Swine
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