Foreign Demand for U.S. Treasury Securities Take $53 Billion Record Fall in December

...is this the Canary in the Gold Mine for U.S. Debt Demand?

By Tim Connolly

CNBC reported that per U.S. Treasury data, foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion.

The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits. This could be the leading indicator of a precipitous drop in demand for U.S. debt, and absolutely reinforces the need to FREEZE THE BUDGET NOW!

Per CNBC, The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009. The big drop in China's holdings meant that it lost the top spot in terms of foreign ownership of U.S. Treasuries, dropping to second place behind Japan.

Japan also reduced its holdings of U.S. Treasuries, cutting them by $11.5 billion to $768.8 billion in December, but that amount was still more than China's December total of $755.4 billion. The $53 billion decline in holdings of Treasury securities came primarily from a drop in official government holdings, which fell by $52.3 billion. The holdings of foreign private investors fell by $700 million during the month of December. [more…]