The Fed added $82 billion in Mortgage-Backed Securities (MBS) and $65 billion in Treasuries to its balance sheet while allowing $22 billion in repo agreements to roll off the balance sheet. The net gain was $126 billion in the month that the “taper” was set to begin.
“Just because something is inevitable, does not make it imminent, but eventually the future arrives”
The US Government is on an unsustainable debt trajectory. Even though the Federal Reserve has acknowledged this fact, most mainstream pundits consider it a distant problem or even not an issue at all. They argue that debt fears have raged since the debt crossed $1T decades ago and no negative consequences have materialized.
China dumped more US Treasurys in May, pushing their holdings to the lowest level in two years, according to data released this week by the US Treasury Department.
The Chinese divested themselves of US debt for the third straight month, selling off another $2.8 billion in Treasurys in May. The month before, China dumped $7.5 billion in US bonds and that followed on the heels of the biggest US Treasury selloff by the Chinese in nearly 2 1/2 years in March. Over the last three months alone, the Chinese have shed $20.3 billion in US debt.