Posted on 03/25/2025 8:04:33 AM PDT by delta7
Investors abroad sold longer term Treasuries for three consecutive months, a sign of central bankers reducing their reliance on the U.S. as a financial buffer. In January, foreigners sold a net $13.3 billion of U.S. notes and bonds that had more than one year to maturity, the latest Treasury data show. It comes after $49.69 billion was sold in December, following sales of $34.41 billion in the month of U.S. elections, November. Global central banks represent a big chunk of foreign demand. Before the back-to-back net selling of the world’s safest debt, foreigners had kept buying for 15 straight months. The largest net seller in January was Canada. The U.K. was the largest buyer in January, after having been the largest net seller in December. Norway and Japan were the second and third largest net buyers in January, respectively, Goldman said in a note. The rationale for selling can be explained in two ways: Threat of sanctions, freezing of foreign assets, and tariffs work because the role U.S. and its currency plays in the financial machinery. Central banks working to shield their own economy from any potential U.S. punitive action in the future could be reducing their use of dollars…. This so-called act of de-dollarization isn’t new, but has taken a life of its own after the U.S. froze Russian assets. Central banks added 1,045 tons to global gold reserves in 2024, exceeding 1,000 tons for the third straight year.
(Excerpt) Read more at msn.com ...
As the world’s Central Banks are prohibited from buying any E money ( Bitcoin, etc) and Gold is now a Tier One asset, the outcome isn’t going to be good.
The good news, President Trump is aware of the crisis and Shelton has mentioned the creation of Gold backed Treasuries.
For part of the world, yes. In the US, very very soon.
United States: Full Basel III compliance, including the Net Stable Funding Ratio (NSFR) that reinforces gold’s Tier 1 treatment, begins July 1, 2025, with a three-year transition period. This aligns with posts on X noting banks can hold gold as a Tier 1 asset starting then.
You can’t really blame it on Biden because he didn’t have the faculties to do it. It was the evil cabal that surrounded him and we may never know who was pulling his strings.
And so, what are they buying?
However, interest rates are down significantly in the past two months. Therefore, there are more buyers than sellers.
Weimar/Zimbabwe fiscal policy has consequences? Who’da thunk it?
Just the federal government is borrowing a net $2 trillion/year and add in the trade deficit of $1.2 trillion on an economy of $29 trillion with the whole world being about $110 trillion.
Fundamental economic fact of life. Huge debts impoverish individuals and nations. The US debt is a summary of resources that have been consumed, squandered and are not economically productive. Eventually all becomes junk. Foreigners are realizing that their treasury note portfolios are the equivalent of holding a bag of rotting crap.
We're still careening, but at least the brakes are on. Heads up when they start to smoke.
I think it is ridiculous when people refer to government debt as safe given the historical reality. The US has been running deficits with expenses exceeding revenue by around 25% or more lately. Who would consider a loan to a guy who makes $60,000 and keeps spending $75,000 a year and has done gone deeper into debt every year for decades to be a safe loan? Like you said, it’s just a train wreck waiting to happen.
lots of folks dump treasury bonds when interest rates fall and/or are expected to fall ... bonds are a safe haven when interest rates are high and nothing else better presents itself ...
when interest rates fall, bonds lose value, and industry has a much better chance at growth because their own borrowing costs drop as well, thus investment in industrial production is more attractive than investment in bonds ...
If there are going to be high tariffs, there is no reason to hold higher levels of dollars.
It’s banking g 101.
IOUs.........................
Actually you have that backward, when interest rates fall, the price for existing fixed rate bonds go up. For example, say I have a U.S. Treasury bond that pays 7% over the next 10 years. If interest rates fall 1% on what new bonds will pay, then my existing bond becomes more valuable since it pays an even higher interest rate than someone could get buying a new bond.
If there are going to be high tariffs, there is no reason to hold higher levels of dollars.
———-
Let’s hope Trump’s tariffs do the trick and can keep the government coffers full.
US Treasuries aren’t. That said, let’s hope we have the 8,100 tons of Gold we say we have.
And so, what are they buying?
———-
Gold, in historic quantities.
“The largest net seller in January was Canada.”
ok. So?
Anyone know how the DOGE audit findings of Fort Knox do?
—”And so, what are they buying?”
“Buy land, they’re not making it anymore”
MT
“when interest rates fall, bonds lose value”
It’s the opposite.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.