Which countries added US Treasuries in the month of September?Both China and Japan added a substantial amount of US Treasuries in September, according to the latest TIC-data released by the Federal Reserve on Monday. The total foreign holdings of US debt increased as well in September, ending a five-month selling spree of US debt. Compared to August, foreign countries added a net amount of $64,1 billion in US Treasuries to their reserves. The two largest buyers were China and Japan with net purchases of $25,7 and $29 billion respectively.

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The following graph shows all changes in foreign holdings of US debt in September, compared to the month before.

Which countries added US Treasuries in the month of September?

Which countries added US Treasuries in the month of September?

Foreign countries hold on to their US Treasuries

If we take a look at US bond purchases in the first nine months of 2013, we see a similar pattern arise. This year, China added $79,6 billion of Treasuries to their reserves. Japan’s holdings of US Treasuries increased by $74,2 billion in 2013. Other important buyers of US debt were Caribbean banks (+$29,1 billion) and the UK (+$19 billion). Countries like Singapore, Thailand and Russia each sold a substantial amount of US Treasuries in 2013. Their holdings decreased by more than $20 billion. The oil exporting countries – fourth largest foreign holder of US Treasuries – were also selling some of their dollar reserves. Compared to the first of January they sold $15,9 billion of dollar denominated government debt.

Which countries bought US Treasuries in 2013?

Which countries bought US Treasuries in 2013?

Federal Reserve

The central bank of the United States – the Federal Reserve – is buying US Treasuries as well. With quantitative easing they are taking billions of dollars of US Treasuries off the market. In September alone, the central bank bought almost $40 billion of long-term US government debt. In the first nine months of 2013, the Federal Reserve added approximately $360 billion of US government debt to their ever expanding balance sheet.

If we compare the purchases of Treasuries by the Federal Reserve to the purchases done by foreign countries, it becomes clear how the United States is cheating on the rest of the world. It should be clear that they will never repay their debts to foreign countries with the purchasing power of today’s dollars. Countries like China and Russia are fully aware of this and started expanding their gold reserves.

The Federal Reserve bought more Treasuries than any foreign country in September

The Federal Reserve bought more Treasuries than any foreign country in September

So far this year, the Federal Reserve has bought a lot more US Treasuries than any foreign country

So far this year, the Federal Reserve has bought a lot more US Treasuries than any foreign country

Debt financing of the United States

The last graph we want to share with our audience puts the foreign holdings of US debt together with all the Federal Reserve holdings. This graph goes back to 2003 and covers more than ten years of US debt accumulation done by both foreigners and the Federal Reserve. Excluded from this graph is the domestic private holding of US Treasuries, which is about $9 trillion in total at the moment. We can get to this number by simply deducting the foreign holdings and the Federal Reserve purchases of US Treasuries from the official US debt, which is more than $17 trillion at the moment.

US government debt held by the Federal Reserve and foreign countries

US government debt held by the Federal Reserve and foreign countries

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    • Hmmm, Well, it looks like we now see yet ANOTHER shining example of reporting numbers we can’t trust.
       
      The only reason I can think of that Japan would be buying treasuries again is either to complete their side of some undisclosed swap deal…
       
      or… just maybe they just don’t want some nefarious bad-ass setting off another nuclear device under the Pacific tectonic shelf off their coast.

    • @zman, the diversification away from the dollar has been ongoing over the last few years.  It’s a fact.  And what most analysts talk about in the future is just a point of acceleration.  Your comment skirts over the most important point in the above data:  The Fed is now by a huge factor the largest buyer of our debt, in a form of delayed monetization that injures the status of the dollar.  That will (and already has) translated in declining purchasing power for the dollar (that is partly masked by declines in other major currencies due to those host nations’ QE and other easy credit programs).  
       
      The leap in any given month by China and Japan is not surprising.  Japan made a similar move this past summer.  They do these moves in relation to their effort to manage their currency, and to help the Fed from time to time.
       
      While I certainly agree there are too many within the precious metals community that exaggerate and paint a picture of dollar doom as starting tomorrow, 5am, you tend to talk about these things divorced from the big picture.  It’s just a fact that the US is monetizing its debt and that that will eventually impact the purchasing power of our currency and continue (not start, but CONTINUE) the ongoing process of other nations moving away from the use of the dollar as the primary trade and reserve settlement currency of the world.  These dynamics — these facts — have consequences that can be seen even today, but most certainly will be seen in the future, unfolding in visibility as an evolutionary process or stair-step process (and likely, both).
       

    • @Flying Wombat, I agree with everything you said, I have always said that all developed nations are slowly devaluing their currencies, a process that is multi decade long. 
      Yes, the Fed is a huge buyer of the debt, but so is the BOJ, BOE, and the ECB, this is not the end of the world, or the end of paper currencies, this is nature taking its coarse.
      I guess the key point is, this total rejection of the US dollar is not going to happen, there is no alternative for a long time, a slow rejection is the most likely case, China is NOT going to have a gold back Yuan anytime soon, they also look at this process in the long term (decades).

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