Federal Reserve dominates the US Treasury market

This week the Federal Reserve published new data regarding the foreign holdings of US Treasuries. These numbers show Belgium was the largest buyer of US Treasury debt in November last year with an increase in holdings of $20,3 billion. China came in second with a purchase of $12,2 billion of US debt and Japan was the third largest buyer with a $12 billion increase in US government bond holdings. Largest seller was Russia, decreasing it’s US Treasury holdings by $10 billion.

The following charts shows the net changes in bond holdings for the largest foreign holders of US debt. The first chart shows the net change in November, the second chart shows the net change since January 2013. As you can see, the Federal Reserve dominates the charts with their bond buying programme called QE. Last month, the central bank took $47,7 billion dollars of US Treasuries out of the market. In the first eleven months of last year, Bernanke added $456,7 billion dollars of US Treasuries to the Fed balance sheet. This figure dwarfs the $102,5 billion of debt bought by China and the $82,5 billion added by the Japanese.

Belgium was the largest  foreign buyer of US debt in November

Belgium was the largest  foreign buyer of US debt in November

The Federal Reserve bought $456,7 billion of US Treasuries, dwarfing China and Japan

The Federal Reserve bought $456,7 billion of US Treasuries, dwarfing China and Japan

Federal Reserve stockpiling US Treasuries

The Federal Reserve has been buying US Treasuries for a while now. In the last four years they bought more than $1,6 trillion of US government debt, while China and Japan only managed to purchase $577,1 and $551,6 billion of US debt. The next chart explains it all.

The Federal Reserve bought way more Treasuries than any foreign country

The Federal Reserve bought way more Treasuries than any foreign country