Foreigners cut Treasury stakes; rates could rise

AP via News.Yahoo.com ^ | 02/17/10 | Martin Crutsinger and Bernard Condon

[OldDeckHand]

WASHINGTON (AP) -- A record drop in foreign holdings of U.S. Treasury bills in December sent a reminder that the government might have to pay higher interest rates on its debt to continue to attract investors.

China reduced its stake and lost the position it's held for more than a year as the largest foreign holder of Treasury debt. Japan retook the top spot as it boosted its Treasury holdings.

The Treasury Department said foreign holdings of U.S. Treasury bills fell by a record $53 billion in December. That topped the previous record drop of $44.5 billion in April 2009.

Private analysts, though, were split over the significance of the decline. Some doubted that the drop in foreign holdings of short-term Treasuries signified growing unease about holding U.S. debt. They noted that net purchases of longer-term Treasury debt rose in December by $70 billion.

[OldDeckHand]

So it begins.

[freedumb2003]

Good — I keep 6 months gross income in a liquid account and have been POd about not getting any ROI.

[familyop]

China PLA officers urge economic punch against U.S.
http://www.reuters.com/article/idUSTRE6183KG20100209

“BEIJING (Reuters) - Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.”

[familyop]

That was only a few days ago, BTW.

[familyop]

More from the same Reuters article (09FEB10):

"'Our retaliation should not be restricted to merely military matters, and we should adopt a strategic package of counter-punches covering politics, military affairs, diplomacy and economics to treat both the symptoms and root cause of this disease,' said Luo Yuan, a researcher at the Academy of Military Sciences."

[JasonC]

"Could" - but hasn't. No, not "it begins". Instead, US use of foreign capital is already less than half what it was during the boom. And rates are lower, not higher.

[MS_Steve]

Yeaaaaa! We’re majority owned by the Japanese, instead of the ChiCom’s now.... whoopeee!

[Katoolie]

So why did the stock market and gold jump big time yesterday?

Normally, higher interest rates are bearish for gold and stocks.

So who took up the slack in the Treasury auctions?

The Fed? That would explain golds rise.

The stock markets psychology is anyones guess.

It could keep rising despite bear signs because, as the saying goes:

“The market can stay irrational longer than you can stay solvent”

Good luck to anyone in this market.

[Freedom4US]

No offense, but what do you define as “liquid”?

[freedumb2003]

>>No offense, but what do you define as “liquid”?<<

No offense taken — a lot of people have different definitions.

I can go to the bank and get that much cash in my hand that moment. The interest rates stink, but the peace of mind is worth it.