Signs of the Dollar Short: Foreigners Unable to Buy U.S. Treasuries

The headline says it all.

Bloomberg: Foreign Appetite For U.S. Securities Has Taken a Drubbing

Look at the chart that accompanies the article:

That's what deflation looks like. A steadily falling foreign demand for U.S. treasuries because there aren't enough dollars in the global economy. Piling up U.S. treasuries is the "end point" for foreign central banks, but if the dollars never get there, or are instead flowing out, the demand for USTs craters.


  1. How can you tell that it is due to a lack of dollars, as opposed to foreigners parking their dollars in other dollar-denomiated assets?

  2. U.S. debt dump deepens in 2016
    A chart is here.

    I haven't seen evidence of central banks converting USTs to other assets. Some are being converted by private investors, such as in China where outflows are hitting reserves. In contrast, the oil exporters are not receiving the dollars to begin with and are selling reserves to fund government spending or defend their currency.

    If there was an ample supply of dollars and investors were shunning USTs, interest rates would be higher along with high CPI inflation or asset inflation. Also see the TCMDO chart here.