China confirma que ha comenzado la liquidación de los bonos del tesoro estadounidense que tiene en su posesión
Recuerdan que les dije hace tres años que antes de comenzar la destrucción del Dolar estadounidense
China necesariamente tenia que deshacerse de la mayor cantidad posible
de los bonos del tesoro estadounidense (y demás papeles financieros
denominados en Dolares americanos) que tenia en su posesión?.
Claro,
lo necesita hacer antes de que la moneda estadounidense se desplome,
pues de otro modo perdería una gran fortuna, ademas, la misma
liquidación de esos bonos en poder del gobierno chino contribuirá al
colapso del Dolar.
El
martes por la noche, nos preguntamos qué pasaría si los mercados
emergentes se unieron a China en el dumping bonos del Tesoro
estadounidense.
Durante
meses hemos documentado la liquidación del Banco Popular de China de su
gran pila de papel de Estados Unidos. En julio, por ejemplo, observamos
que China había arrojado un registro $ 143 mil millones en bonos del
Tesoro de Estados Unidos en tres meses a través de Bélgica, dejando
Goldman habla por una vez.
Seguimos
todo esto esta semana señalando que gracias al nuevo régimen FX (que,
al menos en teoría, debería haber requerido una menor intervención),
China probablemente ha vendido en algún lugar en el orden de $ 100 mil
millones en bonos del Tesoro estadounidense en las últimas dos semanas
solo en operaciones FX abiertas para mantener el equilibrio del yuan. En
pocas palabras, como parte de la devaluación de China y los intentos
posteriores para contener dicho devaluación, China ha estado purgando
una cantidad épica de los bonos del Tesoro. FUENTE parcial de la información Aquí
Pero
incluso mientras el gato estaba fuera de la bolsa de Cero lectores de
cobertura e incluso, para mezclar colores metáforas de escape, el genio
ha salido de la botella desde mediados de agosto a China que, gracias a
una firme negativa a flotar el yuan y acabar de una vez, tendrán que
seguir vendiendo USTs por los cientos de miles de millones, el mundo en
general era lento para despertar a lo que las intervenciones cambiarias
de China en realidad implicaba hasta el miércoles, cuando ocurrieron dos
cosas:
i)
los escritorios ingresos Bloomberg, citando fijas en Nueva York, señaló
que "la presión de venta sustancial" en USTs largo plazo que emanan de
alguien en el "Lejano Oriente", y ii) Bill Gross preguntó, en un tweet,
si China estaba vendiendo bonos del Tesoro.
Publicado por Enrique Sierra Mendoza
Above is the content the blog provided. If incomplete, read the original here.
It's Official: China Confirms It Has Begun Liquidating Treasuries, Warns Washington
On Tuesday evening, we asked what
would happen if emerging markets joined China in dumping US Treasurys.
For months we’ve documented the PBoC’s liquidation of its vast stack of
US paper.
Back in July for instance, we noted that China had dumped a record $143 billion in US Treasurys in three months via Belgium, leaving Goldman speechless for once.
We
followed all of this up this week by noting that thanks to the new FX
regime (which, in theory anyway, should have required less
intervention),
China has likely sold somewhere on the order of $100 billion in US Treasurys in the past two weeks alone in
open FX ops to steady the yuan. Put simply, as part of China's
devaluation and subsequent attempts to contain said devaluation, China
has been purging an epic amount of Treasurys.
But
even as the cat was out of the bag for Zero Hedge readers and even as,
to mix colorful escape metaphors, the genie has been out of the bottle
since mid-August for China which, thanks to a steadfast refusal to just
float the yuan and be done with it, will have to continue selling USTs
by the hundreds of billions, the world at large was slow to wake up to
what China’s FX interventions actually implied until Wednesday when two
things happened: i) Bloomberg, citing fixed income desks in New York,
noted "substantial selling pressure" in long-term USTs emanating from
somebody in the "Far East", and ii) Bill Gross asked, in a tweet, if
China was selling Treasurys.
Sure enough, on Thursday we got confirmation of what we’ve been detailing exhaustively for months. Here’s Bloomberg:
China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public.
China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals.The latest available Treasury data and estimates by strategists suggest that China controls $1.48 trillion of U.S. government debt, according to data compiled by Bloomberg.
That includes about $200 billion held through Belgium, which Nomura Holdings Inc. says is home to Chinese custodial accounts.The PBOC has sold at least $106 billion of reserve assets in the last two weeks, including Treasuries, according to an estimate from Societe Generale SA.
The figure was based on the bank’s calculation of how much liquidity will be added to China’s financial system through Tuesday’s reduction of interest rates and lenders’ reserve-requirement ratios. The assumption is that the central bank aims to replenish the funds it drained when it bought yuan to stabilize the currency.
Now
that what has been glaringly obvious for at least six months has been
given the official mainstream stamp of fact-based approval, the
all-clear has been given for rampant speculation on what exactly this
means for US monetary policy. Here’s Bloomberg again:
China selling Treasuries is “not a surprise, but possibly something which people haven’t fully priced in,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP. “It would change the outlook on Treasuries quite a bit if you started to price in a fairly large liquidation of their reserves over the next six months or so as they manage the yuan to whatever level they have in mind.”“By selling Treasuries to defend the renminbi, they’re preventing Treasury yields from going lower despite the fact that we’ve seen a sharp drop in the stock market,” David Woo, head of global rates and currencies research at Bank of America Corp., said on Bloomberg Television on Wednesday. “China has a direct impact on global markets through U.S. rates.”
As
we discussed on Wednesday evening, we do, thanks to a review of the
extant academic literature undertaken by Citi, have an idea of what
foreign FX reserve liquidation means for USTs.
"Suppose EM and developing countries, which hold $5491 bn in reserves, reduce
holdings by 10% over one year - this amounts to 3.07% of US GDP and
means 10yr Treasury yields rates rise by a mammoth 108bp ," Citi said, in a note dated earlier this week.
In
other words, for every $500 billion in liquidated Chinese FX reserves,
there's an attendant 108bps worth of upward pressure on the 10Y.
Bear
in mind here that thanks to the threat of a looming Fed rate hike and a
litany of other factors including plunging commodity prices and
idiosyncratic political risks, EM currencies are in free fall which
means that it's not just China that's in the process of liquidating USD
assets.
The
clear takeaway is that there's a substantial amount of upward pressure
building for UST yields and that is a decisively undesirable situation
for the Fed to find itself in going into September.
On
Wednesday we summed the situation up as follows: "one of the catalysts
for the EM outflows is the looming Fed hike which, when taken together
with the above, means that if the FOMC raises rates, they will almost
surely accelerate the pressure on EM, triggering further FX reserve
drawdowns (i.e. UST dumping), resulting in substantial upward pressure
on yields and prompting an immediate policy reversal and perhaps even
QE4."
Well
now that China's UST liquidation frenzy has reached a pace where it
could no longer be swept under the rug and/or played down as
inconsequential, and now that Bill Dudley hasofficially opened the door for
"additional quantitative easing", it would appear that the only way to
prevent China and EM UST liquidation from, as Citi puts it, "choking off
the US housing market," and exerting a kind of forced tightening via
the UST transmission channel, will be for the FOMC to usher in QE4.
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