Russia Dumped Most of its US Treasury Holdings, Disappeared from List, by Wolf Richter

Summit or no summit, Russia’s government doesn’t like US Treasury debt at this time. From Wolf Richter at wolfstreet.com:

Who stepped up to the plateIt’s a good thing Russia never held as many US Treasury securities as China and Japan. The scenario would have been different.

The “grand total” of US Treasury bonds, notes, and bills held by official foreign investors (central banks, governments, etc.) and non-official foreign investors rose by $44.6 billion to $6.17 trillion at the end of May, according to the Treasury Department’s TICdata released Tuesday afternoon. This is in the middle of the range of the past 12 months.

But Russia stands out by its sudden absence.

Russia was never a large holder of US Treasuries, compared to China and Japan. In March it was in 16th place with $96.1 billion in Treasury holdings. In April, it liquidated $47.4 billion of its holdings, and ended the month with $48.7 billion. That was down 69% from May 2013 ($153 billion). It knocked Russia into 22nd place behind the UAE and Thailand.

And it May, Russia liquidated more of its holdings and disappeared entirely from the TIC’s list of the 33 largest foreign holders of Treasuries. The smallest one on the list was Chile, with $30.2 billion. Russia’s holdings fell below that amount.

So we go to the TIC list of all countries that hold US Treasuries, and find that Russia’s holdings have plunged to $14.9 billion:

If there was a message in Russia’s liquidation of US Treasuries, it was a pitch in the water: The 10-year Treasury sell-off that had started last September peaked with the 10-year yield at 3.11% on May 17. Since then, the 10-year Treasury has rallied under heavy demand, and the yield has fallen – hence the handwringing about the inverted yield curve.

The largest holder of US Treasuries is China, a position it had lost briefly during its era of peak capital-flight from October 2016 through March 2017. Its holdings in May ticked up by $1.2 billion to $1.183 trillion. Its holdings have remained within the same range since August 2017, despite escalating threats of a “trade war.”

To continue reading: Russia Dumped Most of its US Treasury Holdings, Disappeared from List

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