Central banks around the world are gradually becoming less bullish on United States debt, according to new data from the Treasury Department.
The latest numbers show that foreign central banks sold $192 billion worth of U.S. Treasury bonds in the first six months of 2016. The central banks of China, Japan, Brazil, Colombia and France were the leaders in this massive debt dump.
Apparently, this is the biggest selloff off U.S. debt since 1978.
One of the reasons why central banks are reducing their Treasury holdings is so they can generate enough cash to maintain the value of their own crumbling currencies. Moreover, despite the safe haven description of U.S. bonds, they are producing record-low yields (SEE: U.S. 10-year bond falls to record low yield of 1.36%).
It’s another signal of the weakness in the global economy, too. With oil prices under $50, the major economic slowdown in China, accommodative monetary policies contributing the debasement of currencies and the IMF calling the global economy “fragile,” central banks and foreign governments may not want to hold on to U.S. debt any longer.
China, Japan, Ireland, Cayman Islands and Brazil remain the top holders of U.S. debt.
As time goes by, it becomes more apparent that the public and private demand for U.S. bonds is diminishing.
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