U.S. Treasury Bill Rates Near Record Low; China’s U.S. Treasury Holdings Decline

From Bloomberg:

Treasury bill rates were at almost record lows as the U.S. reached its federal borrowing threshold and a congressional vote loomed in the next few months on raising the nation’s $14.3 trillion limit.

Six-month rates were at 0.07 percent, compared with the record low 0.0305 percent set on May 7, as Treasury Secretary Timothy F. Geithner said he has taken action to stave off the federal debt limit until Aug. 2, using accounting measures that involve two retirement funds. Three-month bill rates were at 0.02 percent, almost the lowest level since they went negative during the financial crisis.

“The debt ceiling issue continues to keep bill rates remarkably low,” said Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “With the cuts in issuance for short-term securities. demand for paper in the front end demand remains firm for bills.”

Geithner wrote lawmakers today to say he has declared a “debt issuance suspension period,” a technical measure that allows him to free up borrowing room from the Civil Service Retirement and Disability Fund and the Government Securities Investment Fund. The steps, which come as Republicans and Democrats argue over when and how to raise the debt limit, won’t affect retirees or government operations.

Since the government shut down non-essential services in 1995, the borrowing threshold has been increased 12 times. In half of those instances, Congress waited until the ceiling had been reached before it was adjusted.

http://www.bloomberg.com/news/2011-05-16/treasury-bill-rates-at-almost-record-low-as-u-s-debt-ceiling-is-reached.html


From Zero Hedge:

At 9 am, Treasury released its March TIC (international funds flow) data. While the headline number of $116 billion in total net TIC flows was slightly higher than February at $116.0 billion compared to $97.7 previously, the net number (offset by US transactions in foreign securities) missed expectations of $33 billion, printing at $24 billion. Notably, of the $116 billion in foreign flows into US securities, foreign central banks were ($10) billion (and privates were $126 billion), indicating that the central banker cartel may be in need of some additional funding soon. Net foreign purchases of long-term U.S. securities were $54.7 billion. Of this, net purchases by private foreign investors were $44.9 billion, and net purchases by foreign official institutions were $9.9 billion. Foreign holdings of dollar-denominated short-term U.S. securities, including U.S. Treasury bills and other custody liabilities, decreased $18.3 billion. Foreign holdings of U.S. Treasury bills decreased $21.9 billion. And while we will provide a full breakdown later in the day, the key trend in US paper holdings continues to be China, whose total US debt holdings dropped for the 5th consecutive month in a row at $1144.9 billion, and the largest one month decline since November 2010.

http://www.zerohedge.com/article/chinese-treasury-holdings-decline-fifth-month-row-biggest-drop-november-2010