Foreign central banks trimmed their US Treasury debt holdings by $17 billion in August to the lowest level since 2012. So far the situation is only getting worse. The latest data showed that there is a massive sell-off of US Treasuries among global central banks. Their holdings of US debt fell by $27.5 billion for the week, the biggest weekly decline since January 2015. This pushed the total amount of custodial paper to $2.83 trillion, the lowest since 2012.
Moreover, there was $335 billion in Treasury selling in the period July 2015-June 2016. After a few months, the number has risen to a new all-time high $343.4 billion.
The biggest seller was China. The country’s balance of US government debt was down $22 billion in July 2016 compared with the prior month.
Thus, it is increasingly obvious that foreign central banks and sovereign wealth funds holding US paper are liquidating it at a very fast pace.
Speaking of China, it is particularly the way the government wants to stop its currency’s devaluation. Meanwhile, Saudi Arabia sells US debt to finance its budget deficit.