tag:blogger.com,1999:blog-4900303239154048192.post1853467882429242570..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: The Saudi “Threat” to Dump TreasuriesUnknownnoreply@blogger.comBlogger5125tag:blogger.com,1999:blog-4900303239154048192.post-942432363477089172016-04-21T09:09:38.768-04:002016-04-21T09:09:38.768-04:00Why would any government leave its money where thi...Why would any government leave its money where things like this can happen? Or not be prepared to take a small loss to guard against the risk?<br /><br />http://www.aljazeera.com/news/2016/04/supreme-court-iran-funds-beirut-blast-victims-160420163621883.htmlPeter Thttps://www.blogger.com/profile/13289172253358199028noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-49312503563584871132016-04-17T02:34:31.504-04:002016-04-17T02:34:31.504-04:00http://ticdata.treasury.gov/Publish/mfh.txt
MAJOR ...http://ticdata.treasury.gov/Publish/mfh.txt<br />MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES<br /> (in billions of dollars)<br />Per this table of the $6.2 trillion of Treasuries held overseas, and which would include Bills, Notes, and Bonds, the total holdings of the Saudis and ALL OTHER MIDEAST oil producers are encompassed somewhere within the straightforward "Oil Exporters" at $281 billion plus some proportion of offshore holders "Carib Bkg Ctrs" $361 billion, UK (including Channel Islands and Isle of Man) $236 billion and perhaps Switzerland, Luxembourg etc. But in those last they would be competing with oligarchs from around the world.<br /><br />So totaling it all up how much exposure does the U.S. Treasury Bond have to any individual world actor? Because there is an odd tendency to equate "Foreign Reserves of U.S. Securities and Assets" with "Treasuries" when clear the later are a smallish fraction of the former. In particular there just are not that many Long Bonds out there.Anonymoushttps://www.blogger.com/profile/04849952583072660993noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-21328503619112307532016-04-17T02:18:01.750-04:002016-04-17T02:18:01.750-04:00I have been posting on this for a couple years now...I have been posting on this for a couple years now at Angry Bear but no one seems to want to engage.<br /><br />One you have to disaggregate Treasury Bills, Notes, and Bonds. Bills and Notes in the age of the ZLB are just dollar equivalents, who cares if investors dump securities carrying sub 1% yields or coupons. They are just selling dollar instruments officially carrying negative real rates (bills and notes) for actual dollar deposits that if anything should be carrying even more negative rates but still unaccountably are in demand. "I'll show you!! I'll exchange all these Bills and Notes denominated in $1000s for stacks of Benjamins and rolls of Quarters!!"<br /><br />Whatever Dude.<br /><br />Which leaves Bonds. Which actually carry Debt Service costs in the way of twice yearly interest payments and mostly have coupon yields that are clinging to non negative real rates. But Treasury Bonds are a fairly small fraction of Debt Held by the Public and due to the two rounds of Qe1&2 are just about 70% held by the Fed. Leaving a relatively small fraction out there to be held by the Saudis or the Chinese (also the subject of 'dumping' claims on the sketchy financial sites at the bottom of every news website out there "Hi Peter Schiff!!") The question no one seems willing to answer is how much exposure the the U.S. 'long bond' actually has worldwide, as opposed to holdings of Bills and Notes, and whether any entity whether sovereign wealth fund or Central Bank could really drive rates above Fed targets by dumping their holdings. Or whether this is all projections of a fart in a hurricane.<br /><br />My investigations of public data sources suggest 'fart'. Then again my actual credentials on this and frankly my math chops put me at a disadvantage here. Which is why I have been putting this in the form of a question for YEARS now. And getting no answer. So lets put the question again:<br /><br />Do either the Saudis or the Chinese have sufficient actual holdings of Bonds with coupons over 2% that dumping them would have ANY impact on the ability to sell new 10 year and longer securities into the market at near current rates? Please edikate this moran.Anonymoushttps://www.blogger.com/profile/04849952583072660993noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-7755619351851442422016-04-16T22:50:40.375-04:002016-04-16T22:50:40.375-04:00It's less about any possible gain or loss than...<br />It's less about any possible gain or loss than exposure to fairly arbitrary US claims. Why would Iran, Argentina, Saudi, Pakistan, Gulf States, Russia or any other state exposed to this sort of action keep money where the US can freeze it? Over time, it's a significant weakening of the US hold over the world financial system.Peter Thttps://www.blogger.com/profile/13289172253358199028noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-36845864936073938332016-04-16T14:52:29.036-04:002016-04-16T14:52:29.036-04:00It's worse than that. The point of the Saudi t...It's worse than that. The point of the Saudi threat is to hurt the US by reducing the price of Treasuries by greatly increasing the available supply. Thus they would be driving down the price of their own asset. The only people who would lose are the Saudis. For the reasons you say, prices would quickly go back to where they were and those who bought these fire-sale priced bonds would profit at the Saudis expense.Brucehttps://www.blogger.com/profile/14907795533418661149noreply@blogger.com