In this item at the Global Macro Monitor blog, the Federal Reserve’s Z1 Flow of Funds data through the fourth quarter of last year was examined to see if there were any noticeable trends in who’s been buying U.S. Treasuries lately. It turns out there is…
As seen above (in a chart that was reorganized a bit to fit the column width without altering the data), there were a dearth of domestic Treasury buyers last fall and, as noted at the Global Macro Monitor blog, since most of the “Rest of the World” category is foreign central banks recycling proceeds from the U.S. trade deficit, “it’s likely that 90 percent of the U.S. budget deficit in Q4 was funded by central banks”,all of which bodes ill for the Fed stopping their purchases in just a few months.
