The BRICS Nations of China, Brazil, and Saudi Arabia Dumped $17,400,000,000 in US Treasuries in One Month
China and Brazil, two of the BRICS’s founding members, and Saudi Arabia, a new member, are reportedly selling up their US Treasury holdings.
U.S. Treasury Department data from the end of July shows China’s holdings of U.S. government debt fell from $835.4 billion at the beginning of the month to $821.8 billion at the month’s conclusion.
In the same year, Brazil, another BRICS nation, reduced its Treasury holdings by $2.7 billion, from $227.4 billion to $224.7 billion.
Saudi Arabia also reduced its holdings, selling $1.1 billion worth of assets, bringing its total to $109.2 billion.
India, one of the BRICS’ original members, saw its foreign exchange reserves fall from June’s $235.4 billion to July’s $233.1 billion.
Another new BRICS member, the United Arab Emirates, has lowered its treasury holdings by $300 million, from $65.2 billion in June to $64.9 billion in July.
The sell-off has reached an inflection point, according to Adam Kobeissi, publisher and editor in chief of The Kobeissi Letter.
“Nearly half a trillion dollars’ worth of US Treasuries have been sold by China since their peak around a decade ago.
A possible explanation is a downturn in their economy. Also, this may represent a change in strategy as a whole. In any case, this is a tendency that won’t go away.”
In recent days and weeks, financial upheaval has been provoked by a sell-off in the bond market and a sharp spike in Treasury rates.
The 10-year yield peaked at 4.85 percent on Friday while the 30-year yield surpassed 5 percent after a better-than-expected employment report.
Investors are split on whether or not the Federal Reserve will raise interest rates next month, with 72.9% expecting no change and 27.1% anticipating a rise of 25 basis points, according to the CME’s FedWatch tracker.
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