On July 18th the US Department of The Treasury revealed that the top foreign holders of U.S. Treasury bonds / debt are selling off their holdings at an alarming rate.
Japan, which is #1 holder reduced its U.S. Treasury bonds by $30.4 billion in May.
China reduced its holdings of U.S. Treasury bonds by $22.2 billion in May. This marks the second consecutive month of reduction and brings its total holdings close to the historical low of 801.5 billion dollars.
China has been steadily reducing its holdings since August of last year.
But here is the surprising news that everyone should start paying attention to.
In April at least 19 countries globally have sold off U.S. Treasury bonds leading to a reversal in the flow of funds invested in U.S. Securities.
We know about China and Japan.
But …
- the UK
- Belgium
- India
- Norway
- Saudi Arabia
- Netherlands
- The UAE
- Thailand
- Spain
- Australia
- Philippines
- Israel
- Sweden
- Colombia
- Vietnam
- Iraq
- And the Bahamas among others have sold off U.S. Treasury bonds to varying degrees.
The Cayman Islands and Bermuda have also engaged in U.S. bond sales amid the U.S. debt ceiling deadlock and our looming banking crisis.
Why this is interesting is The Caymans and Bermuda are two island states that so many companies and individuals have “offshore accounts. In fact, if you have ever been to the Caymans, all you see are bank offices everywhere. So even banking nations are fleeing US debt / T-bills.
Even strong allies like the UK which is the third largest holder of U.S. Treasury bonds sold off $14.1 billion in May marking the second consecutive month of US debt reduction, with a total sell off of $44.5 billion for April and May combined.
Australia also sold off U.S. Treasury bonds for the second consecutive month selling $6.5 billion in May representing a sell off rate of 11%.
Israel sold off $3.8 billion in April and May reducing its holdings from the peak of $69 billion in December 2021 to $43.5 billion. Israel has been in a continuous state of selling off US debt.
Saudi Arabia sold off $4.9 billion in May and Saudi Arabia’s holdings have declined from a peak of $184.4 billion two years ago to $111.3 billion with a cumulative net sell off of $73.1 billion a sell off rate of around 40%.
The UAE sold off $1.2 billion of U.S. Treasury bonds in May.
Iraq has been selling off U.S. Treasury bonds continuously since February, which is no surprise with a total of $8.5 billion representing a 21% sell off rate with only $32.7 billion U.S. debt held.
The Fed’s aggressive interest rate hikes have hit many countries around the world. These countries have been impacted big time by the U.S. dollar and the 10-year U.S. Treasury yield which has risen sharply.
Because of this, even our allies have seen the need to reduce their reliance on the U.S. dollar and U.S. Treasury bonds.
For a long time, the U.S. has utilized the reserve status of the U.S. dollar and the monetary policies of the Federal Reserve to its advantage in the global economy. However, this has also been the reason why many countries have lost interest in U.S. Treasury bonds.
As I have been warning you, now more and more countries are beginning to break free from their dependence on the U.S. dollar and U.S. Treasury bonds.
This has now become an ever-growing trend in the global currency arena.
Because of the Petro Dollar system, the U.S. has been using that financial leverage to impose restrictions on many oil producing countries using the Petro dollar as an economic weapon.
But now we are starting to see the oil producing countries no longer adhering to the dollar-based system…
AND… BRICS starts marching in.
Like it or not, our current administration and The Fed has dug our own grave.
Countries are no longer willing to play the Petro Dollar game and possibly face potential repercussions. The repercussion is that we are seeing an acerating de-dollarization effort taking place right before our eyes.
All these countries are also accelerating their increase in gold reserves to replace U.S. Treasury bonds so that they can divest themselves from our dollar hegemony.
Even ally countries such as France and Germany have increased their gold piles to exceed 65% of their foreign exchange reserves.
We are witnessing an increasing number of countries repatriating, or bringing their gold back home, so as to reduce their reliance on U.S. Treasury bonds and break free of the need to use dollars.
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