BOOM! China Admits Their Dumping US T-bonds!

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BOOM! China Admits Their Dumping US T-bonds! /killcen/ 08/28/15 (Fri) 06:31:39 No.273

It's Official: China Confirms It Has Begun Liquidating Treasuries, Warns Washington

On Tuesday evening, we asked what would happen if emerging markets joined China in dumping US Treasurys. For months we’ve documented the PBoC’s liquidation of its vast stack of US paper. Back in July for instance, we noted that China had dumped a record $143 billion in US Treasurys in three months via Belgium, leaving Goldman speechless for once.

We followed all of this up this week by noting that thanks to the new FX regime (which, in theory anyway, should have required less intervention), China has likely sold somewhere on the order of $100 billion in US Treasurys in the past two weeks alone in open FX ops to steady the yuan. Put simply, as part of China's devaluation and subsequent attempts to contain said devaluation, China has been purging an epic amount of Treasurys.

But even as the cat was out of the bag for Zero Hedge readers and even as, to mix colorful escape metaphors, the genie has been out of the bottle since mid-August for China which, thanks to a steadfast refusal to just float the yuan and be done with it, will have to continue selling USTs by the hundreds of billions, the world at large was slow to wake up to what China’s FX interventions actually implied until Wednesday when two things happened: i) Bloomberg, citing fixed income desks in New York, noted "substantial selling pressure" in long-term USTs emanating from somebody in the "Far East", and ii) Bill Gross asked, in a tweet, if China was selling Treasurys.

Sure enough, on Thursday we got confirmation of what we’ve been detailing exhaustively for months. Here’s Bloomberg:

China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.

Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.

The latest available Treasury data and estimates by strategists suggest that China controls $1.48 trillion of U.S. government debt, according to data compiled by Bloomberg. That includes about $200 billion held through Belgium, which Nomura Holdings Inc. says is home to Chinese custodial accounts.

http://www.zerohedge.com/news/2015-08-27/its-official-china-confirms-it-has-begun-liquidating-treasuries-warns-washington

China has cut its holdings of US Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.

Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with US authorities about the sales, said another person. They didn’t reveal the size of the disposals.

The People’s Bank of China has been offloading dollars and buying yuan to support the exchange rate, a policy that’s contributed to a $315 billion drop in its foreign-exchange reserves over the last 12 months. The $3.65 trillion stockpile will fall by some $40 billion a month in the remainder of 2015 because of the intervention, according to the median estimate in a Bloomberg survey.

China selling Treasuries is “not a surprise, but possibly something which people haven’t fully priced in,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP. “It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind.”

The PBOC and the US Embassy in Beijing didn’t immediately respond to requests for comment. Bill Gross, who manages the $1.47 billion Janus Global Unconstrained Bond Fund, tweeted Wednesday “China selling long Treasuries ????”.

Two-year Treasuries erased an earlier advance, with their yield little changed at 0.67 percent as of 11 a.m. in London. It fell as much as two basis points. The 10-year yield declined three basis points to 2.15 percent, near to its average for the past month.

Chinese sales of US government debt may have kept yields from falling this month as a selloff in global stocks prompted investors to favor the safest assets.

http://www.bloomberg.com/news/articles/2015-08-27/china-said-to-sell-treasuries-as-dollars-needed-for-yuan-support

13 Facts of Inevitable Collapse /killcen/ 08/28/15 (Fri) 09:34:48 No.274

File: 1440754488397.png (78.35 KB, 585x688, 585:688, 13_Facts_of_Inevitable_Col….png)

While other economies around the globe are suffering, it is important to point out

to those who have the illusion that the United States is exceptional and a crisis

"can never happen here", that in fact it IS happening here as well. Here are

some facts to point out: (1) Around 50% of all Americans now rely on paychecks

/ handouts from the US government to get by day-to-day. (2) Most manufacturing

jobs have been outsourced since the 1980s - we have very little manufacturing.

(3) We no longer have any grain reserves to provide for food during a major

crisis. (4a) Over 50% of children born in the US live in poverty. (4b) The US

faces record amounts of poverty - the only time poverty was worse was during

the Great Depression. (5) China has surpassed the US in economic growth - for

a communist country, that's a real slap in the face. (6) Little do most people

know, we not only hold a record amount of nation debt, we ALSO hold 1.5 quadrillion

dollars in DERIVATIVE DEBT! (7) Nations within the BRICS have begun to dump the

dollar and are now trading outside the dollar (this is causing institutions like

the IMF and US Federal Reserve to panic). (8) We now see long lines and even

shortages at food banks. More Americans than ever before rely on food banks to

feed themselves and their families. (9) Our current energy industry is going

completely bankrupt, in fact some of the biggest US-based energy companies are

filing for bankruptcy. This is a very bad sign for our future and will impact

our current lifestyle in the near future. The only industries left standing

is firearm manufacturing, war contracting and the privatized prison industry.

I know a few working in the auto-industry that have admit to me things are

TERRIBLE and auto buisnesses are going bankrupt every week. (10) Due to the ACA

(Obamacare) most Americans can no longer afford the rising premium costs for

health insurance. (11) Only TWO OUT OF TEN of the biggest banks in the world

are US banks. That may be shocking but it is true. (12) It is now official and

has been announced by the Russian government there will be *multiple currencies

within the BRICS nations that will be gold-backed in the future and they will

NO LONGER accept the US dollar for commoditized trade. Ouch! (13) The Fed will

not allow gold audits within the US, we have no way of knowing how much gold

the US has left. Note that many countries have demanded their gold reserves back

and the US Fed is stalling. Why so? That is not a good sign.

Those who claim "this can never happen here" are just dead wrong. It IS happening.

In fact, some economists have predicted there may be another world war over it!

It is only a matter of time before *many other nations (including other super-powers)

flip the middle finger at the United States and say "we are done with this, we are

out, we are dumping the dollar, game over you guys." When will that time come? I

don't know for sure - no one knows - but it is inevitable. The best thing we can do

is prepare for it, that or suffer the consequences for being lazy and arrogant.

What China's Treasury Liquidation Means *.* 08/29/15 (Sat) 17:19:40 No.283

What China's Treasury Liquidation Means

Earlier today, Bloomberg - citing the ubiquitous "people familiar with the matter" - confirmed what we’ve been pounding the table on for months; namely that China is liquidating its UST holdings.

As we outlined in July, from the first of the year through June, China looked to have sold somewhere around $107 billion worth of US paper. While that might have seemed like a breakneck pace back then, it was nothing compared to what would transpire in the last two weeks of August. Following the devaluation of the yuan, the PBoC found itself in the awkward position of having to intervene openly in the FX market, despite the fact that the new currency regime was supposed to represent a shift towards a more market-determined exchange rate. That intervention has come at a steep cost - around $106 billion according to Soc Gen. In other words, stabilizing the yuan in the wake of the devaluation has resulted in the sale of more than $100 billion in USTs from China’s FX reserves.

That dramatic drawdown has an equal and opposite effect on liquidity. That is, it serves to tighten money markets, thus working at cross purposes with policy rate cuts. The result: each FX intervention (i.e. each round of UST liquidation) must be offset with either an RRR cut, or with emergency liquidity injections via hundreds of billions in reverse repos and short- and medium-term lending ops.

It appears that all of the above is now better understood than it was a month ago, but what’s still not well understand is the impact this will have on the US economy and, by extension, on US monetary policy, and furthermore, there seems to be some confusion as to just how dramatic the Treasury liquidation might end up being.

Recall that China’s move to devalue the yuan and this week’s subsequent benchmark lending rate cut have served to blow up one of the world’s most popular carry trades. As one currency trader told Bloomberg on Tuesday, "it’s a terrible time to be long carry, increased volatility – which I think we’ll stay with – will continue to be terrible for carry. The period is over for carry trades."

Read the rest here:

https://archive.is/8Yrm6

http://www.zerohedge.com/news/2015-08-27/what-chinas-treasury-liquidation-means-1-trillion-qe-reverse

/realnews/ 08/29/15 (Sat) 17:33:36 No.285

August 27th: topics covered are financial trade war between the US & China having turned hot nasty, starting with Tianjin (possibly micro nuke hit) on the most strategic business and information center inside China, the US Stock market nose dive and implications with possible shenanigans in the mix, the silver market shortages with empty supply, risk of mint and market shutdown, ins & outs of the massive USTreasury Bond dumping by China following the RMB devaluation in response to IMF rejection of RMB in their basket and generally to QE to Infinity Squared, massive energy sector losses starting with the marginal shale niche and extending to the core energy sector, with $1 trillion losses and numerous wrecked companies, and extreme challenges to elite Private Equity firms, with Wall Street acting as energy hedge counter-party guarantor on the hook for multiple $trillions, the risk being a final death blow to Wall Street banks.

https://www.youtube.com/watch?v=j7U3K34spuQ

https://www.perpetualassets.com/news/2015/08/27/we-are-at-war/

Also, you can find the interview backed up @ MEGA: #F!2ZNDHDyY!37-rElRY2dYtmqmazAkqrA

China approves usage of ruble instead of US dollar for border city /killcen/ 09/01/15 (Tue) 15:26:13 No.317

China's central bank has put the Russian ruble into circulation in Suifenhe City, Heilongjiang Province, launching a pilot two-currency (ruble and yuan) program. The ruble is being introduced in place of the US dollar.

The announcement was made on Saturday by Jin Mei, deputy secretary for monetary policy at the opening ceremony of a trade exposition in Suifenhe, reported state-run Xinhua news agency.

The newly-adopted initiative is to promote bilateral trade relations and boost tourism, enabling Russians traveling to the Chinese region to pay for their expenses directly in rubles.

This year’s six month Russia-China financial results look promising with yuan-denominated payments reaching the value of $1.32 billion, added Mei.

Wu Qinglan, executive vice-mayor of the Chinese city, believes the program guarantees a long-term outlook.

“Next, we will carry out dual currency settlement in shopping malls, hotels and restaurants in Suifenhe. All the banks will provide services accomplishing the storage and exchange of rubles,” she said, as cited by the CRI English news website.

A staff member at the local Qingyun Market shared his impressions about the move: “On our price tag, there are two currencies: one is renminbi [China’s domestic currency], and the other, the ruble. This has greatly simplified our trades. The Russian merchants this is convenient, and so do we.”

http://www.rt.com/business/312004-china-russia-ruble-currency/

China Dumps A Record $94 Billion In US Treasurys In One Month *.* 09/08/15 (Tue) 09:12:43 No.368

Shortly after the PBoC’s move to devalue the yuan, we noted with some alarm that it looked as though China may have drawn down its reserves by more than $100 billion in the space of just two weeks. That, we went on the point out, would represent a stunning increase over the previous pace of the country’s reserve draw down, which we’ve began documenting months ahead of the devaluation (see here, for instance). We went on to estimate, based on the estimated size of the RMB carry trade unwind, how large the FX reserve liquidation might need to be to offset capital outflows and finally, late last week, we suggested that China’s official FX reserve data was set to become the new risk-on/off trigger for nervous, erratic markets. In short, the pace at which Beijing is burning through its USD assets in defense of the yuan has serious implications not only for investors’ collective perception of market stability, but for yields on core paper, for global liquidity, and for US monetary policy.

On Monday we got the official data from China and sure enough, we find out that the PBoC liquidated around $94 billion in reserves during the month of August and as Goldman argues (see below), the "real" figure might have been closer to $115 billion. Whatever the case, it’s a staggering burn rate and needless to say, were the PBoC to continue to liquidate its assets at this pace, it would necessitate a raft of RRR cuts and hundreds of billions in short-term liquidity ops to ensure that money market don’t seize up in the face of the liquidity drain.

… …

Of course the huge draw down was widely anticipated and indeed, we've explored and detailed virtually every angle of this story in the lead up to the data. The key takeaway here is that we now have official confirmation that August saw $94 billion in reverse QE (and more likely $115 billion) or, quantitative tightening as Deutsche Bank puts it.

We can, as we explained on Saturday, argue about what the ultimate effect on safe haven assets will be, but what's not up for debate is that conceptually speaking, China's massive UST dumping is the opposite of Western central bank QE and as such should be expected to pressure yields. More specifically, Citi has suggested that for every $500 billion in EM FX reserve liquidation, there's an attendant 108 bps or so of upward pressure on 10Y yields. Similarly, Deutsche Bank, citing the extant literature, flags 50-60bps of upward pressure on 5Y yields for every $100 billion in monthly EM FX reserve liquidations.

The takeaway, as we put it last week, is that if the Fed hikes this month, it will be tightening into a tightening.

… …

Still, China isn't the only country liquidating its USD assets. When you consider that global EM FX reserves amount to more than $7 trillion, it seems reasonable to ask whether the flight to safety that would invariably accompany a worldwide selloff in risk assets would be sufficient to replace the lost bid from massive reserve draw downs. Or, as we put it on Saturday, "the real question is what would everyone else do. If the other EMs join China in liquidating the combined $7.5 trillion in FX reserves (i.e., mostly US Trasurys but also those of Europe and Japan) shown below into an illiquid Treasury bond market where central banks already hold 30% or more of all 10 Year equivalents (the BOJ will own 60% by 2018), then it is debatable whether the mere outflow from stocks into bonds will offset the rate carnage."

And that consideration, in turn, puts the Fed in a very, very difficult spot. A rate hike cycle will put further pressure on already beleaguered EM currencies which raises the possibility that the FX reserve liquidation will be larger than the eventual safe haven flows and besides, there's bound to be a lag between the liquidation of USD assets and the flight to safety and given the potential for extraordinary bouts of volatility in UST, JGB, and German Bund markets, it's anyone's guess what happens in between.

Whatever the case, something will have to give here. That is, all of these dynamics (i.e. a Fed hike, China's massive UST dumping, an EM meltdown precipitating FX reserve drawdowns, illiquid markets for the same assets everyone is dumping, hemorrhaging petrostate budgets, etc.) simply cannot coexist for long without something snapping because, as we put it last week, in this very unstable arrangement, the smallest policy error will reverberate exponentially, and those reverberations can lead to only one thing: the Fed's admission of policy failure by adopting a tightening bias, and ultimately launching another phase of monetary easing, be it QE4 or perhaps even the long-overdue and much anticipated Friedmanesque "helicopter money" episode.

http://www.zerohedge.com/news/2015-09-07/numbers-are-china-dumps-record-94-billion-us-treasurys-one-month

*.* 09/08/15 (Tue) 19:02:05 No.373

X22 Report: China Accelerates Dumping Of Treasuries As Elite Prepare For The Collapse

https://www.youtube.com/watch?v=Y5FFZGafXIU

Here is a backup archive of the X22 Report series (updated per week):

https://mega.co.nz/#F!nVlCmRyR!PtGIgz9mFiCsk1-QZMrnag

More Evidence That China is Dumping US Treasury Bonds /killcen/ 09/17/15 (Thu) 17:01:24 No.484

More Evidence That China is Dumping US Treasury Bonds [1]

According to just released Treasury data [2], China, between its mainland and Euroclear holdings, sold a record $83 billion in Treasurys in the month of July.

The sale of $83 billion took place in July. This is before China announced its devaluation on August 11, which resulted in further liquidations.

[3] Notes ZeroHedge: One can see why suddenly even PBOC official Jiao Jinpu said, earlier today, that the Chinese central bank sees "callenge from FX reserves drop."

There is a tipping point. At some point. Chinese selling will result in a significant climb in US interest rates.

[1] https://archive.is/QD7jk

[2] https://archive.is/bvlxc

[3] https://archive.is/87irs

Peak Treasuries: World Gold Demand is Off to the Races /killcen/ 09/21/15 (Mon) 15:34:11 No.507

File: 1442849651209.png (201.01 KB, 640x463, 640:463, Pedal-4.png)

As Greece concludes its meaningless elections, and sends the same powerless “yes-men” back to Athens to rubber stamp whatever schemes of dispossession that Dijsselbloem has crafted for the Greek people, the rest of the world continues to cast the only vote that matters! For since June, the already high levels of gold and silver purchases have not only continued, but have soared, both in Western retail demand, and in the far East.

Many of those Eastern powers have also escalated the pace at which they’ve bid their US treasury holdings adieu! It’s one thing however, just to say that the world is now leaving treasuries behind, it’s quite another to show it, as this chart so powerfully does…

As they say, a picture is worth 1,000 words, and these words are full of rejection toward the idea of furthering their balances anymore, with putrid US debt. Country after country in that chart is doing precisely the same thing: diversifying out of US treasury securities. It seems quite possible, in fact, that the world has seen “Peak Treasuries”, and that spells a world of hurt coming for US citizens…

Fleeing Toward Strength

However, it’s not simply enough to sell treasuries. You cannot be truly diversified and independent of the US, if you simply swap that country’s debt in exchange for its currency(US dollars). Nor are many of those nations simply deciding to buy a new country’s debt, as they’re continuing to pour tens of billions of dollars each month into gold bullion.

Read the rest here:

https://archive.is/KmbZa

http://thewealthwatchman.com/world-gold-demand-is-off-to-the-races-as-yellen-chickens-out/

China Launches Global Yuan Payment System To Challenge US Dollar /killcen/ 10/10/15 (Sat) 17:12:33 No.674

China’s Central Bank has started a global payment system which provides cross-border transactions in yuan. The China International Payment System (CIPS) intends to internationalize the yuan and challenge the US dollar's dominance.

“The establishment of CIPS is an important milestone in yuan internationalization, providing the infrastructure that will connect global yuan users through one single system,” Helen Wong, greater China chief executive at HSBC, was cited as saying by the Financial Times.

CIPS will accept payments in cross-border trade, direct investments, financing and personal remittances. The system is open for operations 11 hours a day. The first CIPS transaction was completed by Standard Chartered Bank for Sweden's IKEA.

Nineteen banks have been authorized to use CIPS; eight of them are Chinese subsidiaries of foreign banks, including Citi, Deutsche Bank, HSBC and ANZ.

Prior to launching CIPS international, transfers in Chinese currency could be carried out mostly through offshore clearing banks in Hong Kong, Singapore or London. While the procedure was slow and costly, the new system is expected to significantly reduce the cost and time for money transfers.

China is also trying to reduce its reliance on the global transaction services organization SWIFT.

Beijing has been trying to bolster its currency’s presence internationally. The yuan was the fourth most-used currency for cross-border payments in August, with more than 100 countries using it for transactions.

The Chinese currency has overtaken the Japanese yen but is still well behind the US dollar, euro and the pound. Rivaling the dollar in the global financial system has been Beijing's ambition for the yuan since 2010. The country has already opened clearing hubs in London and Frankfurt.

China is pushing hard for the inclusion of the yuan in the International Monetary Fund (IMF) currency basket. While the IMF said the yuan still does not meet the criteria of a freely usable currency, the head of the organization Christine Lagarde said it's “not a question of if, it's a question of when."

https://archive.is/p8ULW

https://www.rt.com/business/318103-china-payment-system-yuan/

China Selling US T-bonds, Still Holding Trillions In US Debt *.* 10/20/15 (Tue) 13:57:27 No.730

File: 1445349447890.png (50.73 KB, 1022x526, 511:263, -1x-1.png)

This graph and video presentation makes it pretty clear this sell-off is going to take time.

The Chinese are not stupid enough to dump the dollar all at once, they too would face an economic collapse if they did.

Nonetheless, this seems to be a new trend that is unfolding slowly and has been warned about by "conspiracy theorists" for many years.

You must give credit where credit is due. An update for those who care to learn more:

https://www.youtube.com/watch?v=2RBLnEtwmoY

Jim Willie Correct Again: US Fed Buying Up It's Own Bonds With QE As China Liquidates *.* 10/20/15 (Tue) 18:15:08 No.732

Notice how Bloomberg is spinning this as good news? Sheer idiocy and hubris at epic levels, they admit with joy that China is dumping bonds and the Fed has to keep buying them back (meaning, no other country wants them anymore!)

"Homegrown demand for Treasuries suggests there’s no reason to panic.

American funds have purchased 42 percent of the $1.6 trillion of notes and bonds sold at auctions this year, the highest since the Treasury department began breaking out the data five years ago. As recently as 2011, they bought as little as 18 percent.

As a group, U.S. investors of all types have also stepped up their holdings of Treasuries since they fell to a low in mid-2014. In 2015, that share has climbed 2.1 percentage points to 33.1 percent of the U.S. government debt market.

That might not sound like much, but the annual increase – which has pushed up Americans’ holdings to a record $4.3 trillion – would be the first since 2012."

“The worries about China selling are misplaced,” said David Ader, the head of U.S. government-bond strategy at CRT Capital Group LLC. “This was one of the great fears of the bond market, and it’s happening and we took it in stride.”

https://archive.is/i415O

China Calls For New Global Currency /killcen/ 10/22/15 (Thu) 16:14:13 No.740

China is calling for a global currency to replace the dominant dollar, showing a growing assertiveness on revamping the world economy ahead of next week's London summit on the financial crisis.

The surprise proposal by Beijing's central bank governor reflects unease about its vast holdings of U.S. government bonds and adds to Chinese pressure to overhaul a global financial system dominated by the dollar and Western governments. Both the United States and the European Union brushed off the idea.

The world economic crisis shows the "inherent vulnerabilities and systemic risks in the existing international monetary system," Gov. Zhou Xiaochuan said in an essay released Monday by the bank. He recommended creating a currency made up of a basket of global currencies and controlled by the International Monetary Fund and said it would help "to achieve the objective of safeguarding global economic and financial stability."

https://archive.is/09H0z

http://abcnews.go.com/Business/story?id=7168919&page=1

China to Allow Direct Conversion Between Yuan and Swiss Franc *.* 11/10/15 (Tue) 02:15:44 No.906

Related: >>674 ; >>740

China took another step to boost the yuan’s global usage, saying it will start direct trading with the Swiss franc, as the nation pushes its case for reserve-currency status at the International Monetary Fund.

The link will start on Tuesday, the China Foreign Exchange Trade System said in a statement, making the franc the seventh major currency that can bypass a conversion into the U.S. dollar and be directly exchanged for yuan. The rate will be allowed to fluctuate a maximum 5 percent on either side of a daily fixing, according to CFETS.

https://archive.is/xbotZ

http://www.bloomberg.com/news/articles/2015-11-09/china-to-allow-direct-conversion-between-yuan-and-swiss-franc