While we will have more to say about the disastrous December TIC data
shortly, which was released early today, and which showed a dramatic
plunge in foreign purchases of US securities in December – the month
when the S&P soared to all time highs and when everyone was
panicking about the 3% barrier in the 10 Year being breached and
resulting in a selloff in Tsy paper – one thing stands out. The chart
below shows holdings of Chinese Treasurys (pending revision of course,
as the Treasury department is quite fond of ajdusting this data series
with annual regularity): in a nutshell, Chinese Treasury
holdings plunged by the most in two years, after China offloaded some
$48 billion in paper, bringing its total to only $1268.9 billion, down
from $1316.7 billion, and back to a level last seen in March 2013!
China dumping U.S. debt. They’re becoming less convinced that we’ll ever be able to pay it back.