Posts Tagged ‘US securities’

China cuts holding of U.S. Treasury securities

China cuts holding of U.S. Treasury securities

China - national geographic photoCourtesy of Edward Harrison at Credit Writedowns

The conventional wisdom is that the US is beholden to foreign agents as they hold much of the US government debt.  In this view, if these agents sell their securities, interest rates in America should increase as demand for US public debt evaporates.

Now comes evidence that China is indeed selling.  The BBC reports.

China reduced its holdings of US government debt by the largest margin in nearly nine years in June, according to data from the US Treasury.

China holds more US government debt than any other country and cut its holdings of US securities by more that 3% in June, said the BBC’s Chris Hogg…

The sales were made as the US treasury secretary was visiting Beijing to try to reassure the Chinese that their investment in his country’s government debt is safe…

In 2008, the Chinese increased their holdings in US debt by 52% over 12 months.

"China has said it would like to establish an alternative to the US dollar as the world’s favoured currency for foreign exchange reserves," said our correspondent.

"So far there is no evidence that there is a suitable alternative. But these figures suggest they are exploring ways to diversify their investments where they can."

But, as you have probably noticed, interest rates have not increased appreciably.  What gives?  Two ideas:

  1. The Chinese aren’t selling because there aren’t enough alternatives.  Just yesterday, there was a Bloomberg article indicating the Chinese are still very much interested in buying US public debt. They may even being moving out on the long-end of the curve.
  2. The premise that interest rates will increase is false.  If the US economy slows, this automatically decreases the current account deficit, meaning the US becomes less dependent on foreign sources to buy Treasury securities.  Increased private sector savings suggests more domestic sources of Treasury funding are now available.

On the whole, I would expect interest rates to rise as government budget deficits increase.  However, I have just presented you two reasons why this might not be so.

 


Tags: , , , , ,




 
 
 

Kimble Charting Solutions

Steel About To Breakdown And Send Bearish Economic Message?

Courtesy of Chris Kimble

Is the Steel Industry suggesting that a recession is nearing? In my humble opinion, the jury is still out on this one.

This chart from Marketsmith.com takes a look at the patterns of Steel ETF (SLX).

SLX has spent the majority of the past 3-years inside of trading range (1). The persistent decline over the past year has it testing the bottom of this trading range at (2).

The weakness over the past year has it below long-term moving averages as its relative strength r...



more from Kimble C.S.

Insider Scoop

Economic Data Scheduled For Tuesday

Courtesy of Benzinga

  • The Johnson Redbook Retail Sales Index for the latest week is schedule for release at 8:55 a.m. ET.
  • San Francisco Federal Reserve Bank President Mary Daly is set to speak at 4:30 p.m. ET.
  • Federal Reserve Board of Governors Vice Chairman for Supervision Randal Quarles will speak in Salt Lake City, Utah at 6:00 p.m. ET.

Posted-In: Economic DataNews Economics ...



http://www.insidercow.com/ more from Insider

Zero Hedge

Why The U.S. Treasury Bull Market Has Barely Started

Courtesy of ZeroHedge View original post here.

Submitted by Eric Hickman, president of Kessler Investment Advisors

The bull market in U.S. Treasury bonds is in full swing and there is plenty more return to be made.

Two articles I wrote last October for Advisor Perspectives (here and here) identified t...



more from Tyler

Phil's Favorites

The Next Breakdown And The Setup

Courtesy of Technical Traders

If you’ve been following our research long enough, you’ll remember that we often discuss Fibonacci Price Theory and how we use it to try to identify opportunities and trends in the markets.  The basic premise of Fibonacci Price Theory is that price is always seeking to establish newer highs or newer lows with every rotation on the charts.  The theory is rather simple to understand and learn and it helps easily identify where support, resistance, and the trend is established.  Let’s take a minute to go over the basics of Fibonacci Price Theory before we continue.

This first example of Fibonacci Price Theory trend is a simple example that highlights the basic premise of the the...



more from Ilene

The Technical Traders

The Next Breakdown And The Setup

Courtesy of Technical Traders

If you’ve been following our research long enough, you’ll remember that we often discuss Fibonacci Price Theory and how we use it to try to identify opportunities and trends in the markets.  The basic premise of Fibonacci Price Theory is that price is always seeking to establish newer highs or newer lows with every rotation on the charts.  The theory is rather simple to understand and learn and it helps easily identify where support, resistance, and the trend is established.  Let’s take a minute to go over the basics of Fibonacci Price Theory before we continue.

This first example of Fibonacci Price Theory trend is a simple example that highlights the basic premise of the the...



more from Tech. Traders

Lee's Free Thinking

The Treasury Supply Drumbeat Has Begun

Courtesy of Lee Adler

The beat goes on. The US Treasury announced a 30 year TIPS issue today, bringing net new Treasury supply for the month so far to $119 billion. 

Here are the details:

Term and Type: 29-Year 6-Month TIPS

Reopening: Yes

Offering Amount: 7 Billion

Announcement Date: 08/15/2019

Auction Date: 08/22/2019

Issue Date: 08/30/2019

Maturity Date: 02/15/2049

PDF | XML

Supply will pound the financial markets to a pulp as far as the eye can see. Those who are currently panicking to buy Treasuries at these ...



more from Lee

Chart School

Bitcoin 2019 fractal with Gold 2013

Courtesy of Read the Ticker

Funny how price action patterns repeat, double tops, head and shoulders. These are simply market fractals of supply and demand.

More from RTT Tv

Ref: US Crypto Holders Only Have a Few Days to Reply to the IRS 6173 Letter

Today's news from the US IRS has been blamed for the recent price slump, yet the bitcoin fractal like the gold fractal suggest the market players have set bitcoin up for a slump to $9000 USD long before the IRS news hit the wire.

Get the impression some market players missed out on the b...

more from Chart School

Digital Currencies

New Zealand Becomes 1st Country To Legalize Payment Of Salaries In Crypto

Courtesy of ZeroHedge View original post here.

Bitcoin and other cryptocurrencies have been on a persistent upswing this year, but they're still pretty volatile. But during a time when even some of the most developed economies in the word are watching their currencies bounce around like the Argentine peso (just take a look at a six-month chart for GBPUSD), New Zealand has decided to take the plunge and become the first country to legalize payment in bitcoin, the FT reports.

The ruling by New Zealand’s tax authority allows salaries and wages to b...



more from Bitcoin

Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

more from M.T.M.

Biotech

DNA testing companies offer telomere testing - but what does it tell you about aging and disease risk?

Reminder: We're is available to chat with Members, comments are found below each post.

 

DNA testing companies offer telomere testing – but what does it tell you about aging and disease risk?

A telomere age test kit from Telomere Diagnostics Inc. and saliva. collection kit from 23andMe. Anna Hoychuk/Shutterstock.com

Courtesy of Patricia Opresko, University of Pittsburgh and Elise Fouquerel, ...



more from Biotech

Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



more from Our Members

Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

more from Promotions





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>