Forex Blog: Currency Trading News & Analysis.

June 7th 2005

Are Central Banks’ appetite for US treasuries fading?

According to recent data, in the month of March, central banks were net sellers of US treasury securities, for the first time in two years. However, the largest seller was Norway-which sold $17 Billion in bonds- not Asian banks, as was originally feared. Interestingly, it seemed the dearth of public buying was offset by a sudden increase in private buying. Apparently, offshore hedge funds have been avidly buying up treasury securities for several months now. Economists caution investors that this will not support the Treasury in the long term; if central banks continue to sell, interest rates could potentially soar. The days of China and Japan buying treasuries in bulk may be over. The Economist reports:

By chance, it seems, Standard & Poor’s chose May 16th to reaffirm the American government’s AAA credit rating. The agency cited, among other things, the advantages of the dollar’s role as the world’s reserve currency, which helped to outweigh the country’s twin deficits and low household savings.

Read More: American Treasury bonds: among the missing

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Posted by Adam Kritzer | in Central Banks, US Dollar | No Comments »

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