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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: loantech who wrote (4345)1/4/2004 9:54:54 AM
From: russwinter  Read Replies (1) of 110194
 
<USG is buying their own paper>

Somewhat, the Fed purchased (monetized) $9.4 billion in November and December. The two month fiscal deficit for the most recent reported periods (Oct-Nov) was $112.5 billion. They monetized $5.1 billion in Sept-Oct., so it has been creeping up as these fiscal deficits mount.

For Nov-Dec., foreign CBs (almost exclusively the BOJ from all reports) bought $72 billion in US debt (would include agencies). Add that to the $9.4 B Fed number and we see "central banks" covering the lion share of the US fiscal deficit. That's one of the twins, how about the other twin, the trade imbalance of $83.1 B for the latest two reported periods of Sept-Oct? Guess that in part would be the private foreign sector at $19.7 billion per month in corporate bond purchases according to the treasury data.

US fund investors are no where to be found lately except in the junk arena (really a quasi-equity speculative proxy IMO). AMG for Nov.:

Taxable Bond Funds report net cash inflows totaling $2.2 billion with $1.5 billion going to High Yield Corporate Bond funds.

US Government Bond funds report outflows of -$3.2 billion overall (-$3.0 billion from funds investing in mortgage-backed securities);

Money Market funds report outflows totaling $13.4 billion.

Municipal Bond fund outflows total -$875 million
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