Japan closing in on China as largest holder of US debt

For just the 2nd month since mid 2009, foreigners sold US Treasuries on a net basis according to the just released TIC data. The main sellers though may have been hedge funds rather than central banks as the biggest region of selling came from the Caribbean where many funds are housed. It coincided with the wild Treasury ride in Sept where the FOMC meeting cut the month in the middle. The 1st half of Sept saw the 10 yr yield jump from 1.55% to 1.87% only to fall back to 1.63% by months end. Both China and Japan added to their holdings but Japan has really ramped up its buying of US Treasuries over the past 6 months and is now only $25b away from passing China as the largest owner of our debt.

IP and the hurricane impact

ndustrial Production in October fell .4%, well below expectations of a gain of .2% but the Fed is saying that Hurricane Sandy “is estimated to have reduced the rate of change in total output by nearly 1 percentage point. The largest estimated storm related effects included reductions in the output of utilities (don’t most of us know unfortunately), of chemicals, of food, of transportation equipment, and of computers and electronic products.” Manufacturing IP fell .9% but the Fed estimates that production would have been flat vs Sept “excluding storm related effects.” Bottom line, the hurricane impact will continue in the data and we’ll do our best to separate it out so as to get a more recurring view of the US economy.

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