After Russia got rid of the bulk of its stocks of US government bonds in just two months, many analysts wondered: is this a kind of rehearsal of what could happen if / when China also begins to dump its US Treasury bonds
It turned out that Russia was indeed trampling the track … but not for China. Turkey, which suffered from US sanctions, was supposed to follow Putin’s “workaround”.
According to the Treasury in June, Turkey withdrew from the list of major holders of US government bonds (the main holders are those who hold bonds worth more than $ 30 billion).
Since the end of 2017, stocks of Turkish-owned US securities have fallen by 52%, falling from $ 32.6 billion in May to $ 28.8 billion in June this year. The maximum was recorded in November 2016 and amounted to $ 61.2 billion.
Since last month, Russia is also not among the main holders of US government bonds. Russia’s reserves have reached an 11-year low and amount to only $ 14.9 billion.
The sale of securities began even before tensions between the United States, Turkey and Russia led to the launch of new packages of duties and sanctions. Last week, the administration of US President Donald Trump imposed new sanctions against Russia “in punishment for the poisoning of former Russian agent Sergei Skripal and his daughter Julia.”
Meanwhile, in July and August, the Turks continued to sell treasuries due to President Trump’s decision to double steel and aluminum tariffs in order to put pressure on Turkey in an incident with American pastor Andrew Branson. Turkey retaliated by announcing the imposition of duties on American products. President Erdogan called for a boycott of the iPhone and other US-made electronics.
Given the pace the anti-American axis is gaining momentum, the question once again arises: when and under what conditions will China and other countries join the demonstrative sale of US public debt?
Turkey, following Russia, is getting rid of the American public debt. According to the US Treasury, from the end of 2017 the volume of treasuries in the reserves of the Central Bank of Turkey decreased by 52%, while in May the absolute figure was $ 32.6 billion, and in June it was already less than $ 30 billion.
Thus, Turkey, like Russia, left the list of the largest holders of the US government debt, where the threshold value is $ 30 billion.
I note that according to statistics published a few hours ago, our country no longer resorted to active operations and retained the volume of treasuries in the amount of $ 14.9 billion.
Let me remind you that at the beginning of the year in the gold and foreign currency reserves of the Bank of Russia there was a treasury worth about $ 100 billion, that is, in less than six months all these securities were almost completely liquidated. The main intrigue is when China, the largest holder of treasuries, starts its sale.
In June, China reduced its investment by only $ 4.5 billion.
In general, the US public debt is now not an object of investment, but an object of diversification. In June, there was a massive sale of treasuries by both official institutions and private financial institutions, for a total of almost $ 50 billion.
One of the most active sellers was Japan – an ally of America. The country sold treasuries for $ 18.4 billion, reducing investment to a minimum since October 2011.