Saturday, March 19, 2005

The US Treasury's TIC report

"TIC" stands for Treasury International Capital System and came out a few days ago. These TIC reports over a number of months are showing that major central bank purchasers of USD denominated debt are no longer purchasing this debt, which they use as central bank reserves, at the rate of increase that they used to buy at. They are still buying (adding) US debt to their central bank reserves but in lessor amounts. Their buying growth rate peaked out roughly during the last half of 2004. Here is a link to a .pdf file with a chart of China's, South Korea's and Japan's buying rates. This decreasing rate of purchase of US debt instruments for foreign central bank reserves means less demand for the US dollar. When the US dollar loses enough value central banks will have to actually start selling their US dollar denominated reserve assets, a lot of which is US Treasury debt instruments.


The big jump in the Carribean Banks number is probably the US Treasury buying it's own debt because now a days it is having a problem selling its debt. The US Treasury would not want to admit to this, and would need a means of hiding their buys.

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