China's October stay on US Treasuries

At the end of October, a total of $798.9 billion trillion, flat at the end of September, or America's biggest creditor, seems to have adapted to the "spend less, save more" life.　　CFP Chart the US Treasury yesterday released the October International Capital Activity Report (TIC), which held a total of $798.9 billion trillion in U.S. Treasuries by the end of October and was the largest holder of U.S. Treasury bonds in September.　　Data show that in October, the United States net outflow of international capital of 13.9 billion U.S. dollars, of which private investors net outflow of 32.1 billion U.S. dollars, official institutions net inflow of 18.2 billion U.S. dollars.　　Japan held 746.5 billion U.S. Treasuries in October, still ranked second. In addition, net purchases of US long-term bonds by foreign investors reached $43.4 billion trillion in October.　　Of these, 28.8 billion dollars were bought for private investors, and net purchases by official agencies were $14.6 billion.　　The first 5 months of this year, China has aggressively increased its holdings of $38 billion trillion in US Treasuries, making the total holdings of US Treasuries more than $800 billion trillion to $801.5 billion, the survey found. June, China's first large-scale reduction of U.S. Treasury bonds, reducing the amount of 25.1 billion U.S. dollars. In July, China again increased its holdings by a hefty 24.1 billion trillion dollars.　　August China small reduction of 3.4 billion U.S. dollars, September small increase of 1.8 billion U.S. dollars to 798.9 billion U.S. dollars. By press deadline, the dollar index continued its rebound since the end of November, a 0.7% rally yesterday.　　Since March this year, the dollar index has fallen to the end of November, the largest decline of 17%.　　America's families have overtaken China to prop up the US Treasury market to observe the rise in household savings rates, which have had a lingering impact on China-US relations.　　The Federal Reserve's recent third-quarter "fund activity" figures show that the portion of household income used for spending is still falling in part from the same period last year, and that part of the savings is still rising. This is clearly bad news for China's export sector, which is simple enough that demand for many Chinese exports has fallen.　　China's exports are expected to fall for the first time since the 1978 economic reforms (the last fall occurred in 1983, when exports fell by only 0.4% per year).　　The rising savings rate in the US means that even if the US economy emerges from its current slump, demand for Chinese goods is unlikely to return to its previous pace.　　As another result of the decline in exports, China's trade surplus fell by about 30% per cent in the first 11 months of the year compared with a year earlier, meaning that the dollar that China earns to invest in US Treasuries is also shrinking.　　This creates a big problem: the US government's various economic stimulus and financial aid programs need to be heavily expanded to support the debt, and where does the funding for debt expansion come from? The answer is that China and other foreign buyers are no longer the main driving force in the US bond market, and that American households, with their savings, are propping up the Treasury. (Note: According to the US Treasury survey in September, China still holds a large number of U.S.Debt, worth 799 billion of dollars. In 2005 and 2006, foreign investors accounted for about 80% of the increase in U.S. Treasury debt balances. This fell to 54% in 2008, about 27% in the third quarter of this year.　　The two main buyers supporting the huge growth in U.S. Treasury bonds this year were American households and the Federal Reserve itself. (On "Financial activity" data: American households ' holdings are not directly investigated by the Fed, but are based on the total minus all other known holders, speciation. So the "family activity" described in the "Money activity" data is likely to reflect a broader range of domestic investors, including hedge funds and other entities that are not adequately covered by statistics. In the third quarter, American households bought about $168 billion trillion in U.S. Treasuries, the Fed bought 113 billion dollars and foreign investors bought 100 billion of dollars. At an annualised rate, American households are buying four times times as much as 2008.　　The change was even more pronounced than in previous years when households sold US Treasuries in net sales. Behind the changes is the growth in the demand for secure savings tools from US domestic investors since the crisis.　　The Fed calculates that this year the savings rate for households excluding consumer durables appears to have stabilized at around 5%, well above the 1% to 2% level of most of 2005-2007.　　As some commentators have pointed out, the idea that the US government will adjust its policies to keep China from buying its national debt may have begun to cool. (This digest has been censored since the Wall Street Journal, published December 15.) )