China Dumps Record $120 Billion In U.S. Treasurys In Two Month Via Belgium

Those who have been following the saga of "Belgium's" US Treasury holdings learned last month that the "mysterious buyer" behind Belgium's Euroclear was, as some speculated, China all along. Nowhere was this more evident than when showing an overlay of China and Belgium's combined TSY holdings versus China's forex reserves.

This is what we concluded last month:

  • "Belgium" is, or rather, was a front for China: either SAFE, CIC, or the PBOC itself.
  • That Belgium's holdings, after soaring as high as $381 billion a year ago, have since tumbled back to only $2532 billon as China has dumped the bulk of its Euroclear custody holdings, and that once this number is back to its historical level of around $170-$180 billion, "Belgium" will again be just Belgium.
  • China's foreign reserves tumbled and this was offset by a the biggest quarterly drop in Chinese pro-forma treasury holdings, which dropped by a record $72 billion in the month of March, and a record $113 billion for the quarter.

It wasn't precisely clear just why China, which had historically used UK-based offshore banks to transact in US paper in addition to the mainland, would pick Belgium or why it chose to hide its transactions in such a crude way, however the recent accelerated capital outflow from China manifesting in a plunge in Chinese forex reserves, coupled with a record monthly liquidation in total Chinese holdings, exposed just where China was trading.

And while we have yet to get an update from Beijing of its April forex reserves, we know that China's Treasury liquidation has continued. Enter: Belgium, only this time it is not a "mystery" buyer behind the small central European country, but a seller.

As the chart below shows, after a record $92.5 billion drop in March, "Belgium" sold another $24 billion in April,bringing the total liquidation to a whopping $116.4 billion for the months of March and April.

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CrisandTony Tiburcio 5 years ago Member's comment

Answer to the last question, to the USA banks that got all the funds from the FED, that was easy. They know something we think we may know too