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Foreign Countries Reduce Their Holdings of U.S. Treasuries

Posted Feb 16th 2010 3:20PM by Connie Madon (RSS feed)
Filed under: Major Movement, International Markets, China, Japan, Economic Data, Headline News, Federal Reserve

We have a warning shot across the bow. Foreigners' holdings of U.S. Treasuries fell by a record $53 billion in December.

China, in particular, reduced its holdings significantly, dropping it into second place behind Japan.

If we dig a little deeper we find that the recent auction of 30-year bonds was quite soft, with a bid to cover ratio of only 2.36 vs. 2.68 in the previous auction (bid to cover ratio gives bids over securities offered for sale.)

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Fed ends purchase of $300 billion in Treasury securities

Posted Nov 1st 2009 2:00PM by Connie Madon (RSS feed)
Filed under: Market Matters, Money and Finance Today, Economic Data, Housing, Federal Reserve

In a major policy shift, the US Federal Reserve ended its purchase of $300 billion dollars of treasury securities.The purchase had the effect of pumping money into the banking system. When the Fed buys securities, it creates a credit on bank balance sheets, thus increasing the banks' ability to lend.

Fed purchases helped to keep interest rates from rising i.e. the yield on the benchmark 10-year note never went above 4%.

At the same time the Fed issued a record $1.25 trillion dollars in treasury notes and bonds, more than double a year ago's auctions. The purchases acted as a cushion for keeping borrowing costs down.

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