Arkady Stravitsky
The US Treasury Department report for
April published on June 15 revealed that Russia sold $47.4 billion out
of the $96.1 it had held in Treasury bonds (T-bonds). In March, Moscow cut its Treasury
holdings by $1.6 billion. In February, Russia reduced its bond
portfolio by $9.3 billion. Other holders did it too. Japan sold off
about $12 billion, China liquidated roughly $7 billion. Ireland ditched
over $17 billion.
The
tariff wars unleashed by Washington stirred fears that financial
markets may be in for a rough ride with American treasuries dumped by
some partners, including such major holders as China and Japan, each
holding over $1 trillion in bonds.
Russia
has cut its holdings in American securities following numerous rounds
of sanctions imposed by Washington against Moscow and amid the ongoing
trade wars between the US and its allies and partners.
This
is bad news and ominous warning for Washington. The foreign demand is
critical to offset an expected surge in federal borrowing needs. The
Treasury Department needs to finance the huge spending bill along with
tax cuts that were passed by Congress in December 2017. It plans to
auction off around $1.4 trillion in treasuries this year with a glut of
sellers and a shortage of buyers in the bond market the government plans
to add $600 billion to.
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