🇺🇸💰 About the situation with US Treasury bonds

🇺🇸💰 About the situation with US Treasury bonds Foreign holders of US securities are gradually selling them off. The volume of US government bonds in foreign accounts decreased over 9 months of 2022 by more than $365 billion. As of January 2022, their amount was $7.6 trillion. According to (https://ticdata.treasury.gov/Publish/mfh.txt) by the US Treasury, the central banks of Japan, China and South Korea are leading in reducing the US government debt on their balance sheets. In 2022, the yen depreciated by 25% against the dollar, the yuan by 10%, and the South Korean won by 17%. To maintain exchange rates, the central banks of these countries are forced to carry out foreign exchange interventions: they sell US government bonds and spend part of the dollars received on the purchase of local currency on the domestic market. ▪️The Central Bank of Japan reduced the volume of US Treasury bonds by $183 billion. $19.7 billion was spent on foreign exchange interventions in September alone. For the Bank of Japan, which has not interfered in the forex market since 1998, these are extraordinary measures. ▪️The volume of US public debt on the balance sheet of the Central Bank of China decreased by $127 billion. ▪️The reduction of US Treasury bonds on the balance sheet of the Central Bank of South Korea is $19.1 billion. More than $8.311 billion has already been spent to support the won. 🔺In 2022, the Fed consistently raises (https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_bill_rates&field_tdr_date_value_month=202211) the discount rate, which increases the yield of Treasury bonds. Liquidity is shrinking and becoming more expensive. This provokes a drawdown in financial markets and leads to a flow of investments from risky assets (stocks) to more conservative bonds. Thus, the US Treasury gets the opportunity to place (https://www.vesti.ru/finance/article/3039595) new volumes of government bonds on the market and compensate for the budget deficit. For Japan, China and Korea, now is a good time to reduce the amount of US government debt on the balance sheet without fear of provoking a panic in the market. So far, this is not a large-scale sale, but simply risk diversification and support for local currencies. But with further strengthening of the dollar and pressure on local currencies, sales of US Treasury bonds may become more widespread.

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