EC Just Who Is, And Who Is Not, Selling T-Bills

According to TIC, there are still hundreds of billions in bills picked up by foreigners during the April-June deluge which, when the Treasury Department decides to cut back in the longer tenor bills, too, would mean even more bill “selling” in the months ahead.

What’s more interesting as far as our purposes go, dollar shortage stuff, is that despite the maturities in bills (and more in corporate bonds), the foreign sector (official and private) hadn’t bought more UST notes and bonds (LT) than what was reported by TIC. It was only a very modest increase: official net buying of LT UST $6.1 billion in September versus net “selling” of $13.5 billion in bills; private net buying of LT UST $16.4 billion despite net “selling” of $16.8 billion in bills and $29.9 billion corporate bonds (discussed previously).

There are, of course, other asset classes than UST securities at either end of the yield curve, but the point remains that what’s indicated despite this kind of forced maturity rotation isn’t overall the same amount of dollar assets we’d expect during reflationary conditions. Bill holdings down, bonds up just a little, plus a whole lot fewer corporates shows that there still are fewer global dollars readily available.

Foreigners aren’t rotating out of bills, Uncle Sam has. What that might do to the collateral markets of late 2020 and 2021, I guess we’ll see. One thing it’s already done, other than once more demonstrate how little these people know (or care to know) about the monetary system and its inherent flaws and faults, is push bill yields down, down, down. It may not seem like much, but equivalent yields have been creeping lower and are several bps below where they had been just a few months ago.

It has been during these months when markets seem to have hit a summer (slowdown) snag (which the current vaccine-phoria hasn’t changed all that much).

In other words, supply has changed in the bill market though demand apparently hasn’t. It’s certainly not what it was in March and April, elevated nonetheless (especially recently).

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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William K. 3 months ago Member's comment

What it all looks like is piling up debt that will need to be paid eventually. And when "eventually " arrives it will no longer be a free party. Of course it is quite likely that the ones to be saddled with this huge debt are not even born yet, and this not likely to benefit from it at all. It is even possible that they will realize this and become upset and unhappy.

So exactly WHO is getting the benefit from the debt being created?I can guess that it is not me. In fact, I am certain that it is not me.

Ayelet Wolf 3 months ago Member's comment

Well said William!

William K. 3 months ago Member's comment

Some times it does not feel at all good to be correct. On occasions like this it would be comforting to have some very informed and wise individual show that I was totally wrong. So I do wonder about why those more in a position to steer things do not steer in a different direction, and why they did not steer in a different direction previously. It can not be that everybody else is blind, can it???