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US Treasuries Have Become Unappetizing for Foreign Central Banks and Governments

152 points · 132 comments · iamnothere

  1. 1over137 · · focus · HN ↗
    US everything has become unappetizing for everyone outside the US.
    1. carefree-bob · · focus · HN ↗
      This is nonsense. The rest of the world holds 9.7 Trillion in Treasuries and this amount increased by $500 billion over the last year.

      So the opposite of this article is true. You can get all the data from the Z.1 release.

      Please don't take these types of flame bait articles seriously or try to spin up an entire world view based on them as you will end up not only directionally wrong, but believe in the exact opposite of reality.

      FYI, that $500B increase in treasury holdings is not the whole picture, there are also the agencies (housing mortage backed securities guaranteed by the govt) and foreign holdings of those also increased by $70 billion over the last year, and are about 1.5 Trillion.

      1. bryanlarsen · · focus · HN ↗
        You are using the wrong metric. The supply of t-bills is increasing rapidly because of the massive deficit. That is sufficient to explain the increased number of holdings.

        The correct metric is price. If there is decreased demand, it will show up in the yield. And it does.

        1. gpt5 · · focus · HN ↗
          Foreign holding of US treasuries has also increased last year. That is not explained by increased deficit, but by net increase in demand.
          1. hvb2 · · focus · HN ↗
            > That is not explained by increased deficit, but by net increase in demand.

            A yield going up means you pay more for the same thing. So if the US wants to issue more debt, they can. The fact that more debt was bought but the yield went to means the supply grew faster than the demand. So an absolute increase in demand, but a net decrease, thus a higher price as shown by the yield

            1. gpt5 · · focus · HN ↗
              That is not true. Yield is going up globally, so you need to adjust for the difference in yield.

              For example, the US and Euro (average) yield have gone up by almost the same amount in that period, and other currencies like Japan and Australia have experienced an even larger increase.

              I’m not sure why the level of discussion in this post is so poor.

              1. hunterpayne · · focus · HN ↗
                "I’m not sure why the level of discussion in this post is so poor."

                Its because bond yields and fixed income in general isn't well understood by the public. Even in finance, its often not correctly understood except by those working in fixed income or the IT teams that support them. Funny thing is, often the devs in those departments understand global finance better than the CEOs running those firms because of how fixed incomes is seen by other departments. Basically, its the lowest department because it doesn't get great yield while ironically requiring the best math and economics knowledge to do.

            2. hunterpayne · · focus · HN ↗
              You are misunderstanding some basic things about bonds. Bonds are weird. Higher yield means the bond gives out more coupons (yield, money, etc). But the bond itself costs exactly the same no matter the yield when first bought.

              The actual thing being bid on in the bond market is the yield itself. Higher yield is sort of like a higher price in that it means you have to offer more to the lenders. However, what they are actually betting on isn't the ability of the US government to repay. What they are actually betting on is the future inflation rate. So a higher yield doesn't mean what it means for corp debt (ie we don't think you will be able to pay this back). A higher yield for t-bills actually means lenders think inflation will increase in the future. Hence the FED raising rates to fight inflation.

              PS But seriously, the bond market is very weird and most people mess up what changes in yield mean for different kinds of bonds because they don't mean the same things (unlike securities ie stocks).

              PPS This is all because of the reduction in the amount of oil available worldwide, which triggers increases in global rates, which triggers increases in US rates.

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