Foreign central banks switching into Treasuries, not willing to buy Fannie/Freddie bonds

As noted by many including Brad Setser and Yves Smith, in August 2008, foreign central banks added close to $46 billion ($45.92b) to their custodial holdings of Treasuries at the New York Fed. Also in August, they reduced their holdings of Agencies by a bit over $13 billion ($13.33b).

What this may mean to the U.S. is that if and when Fannie and Freddie cannot find buyers for their bonds at a do-able interest rate, Fannie and Freddie must at that point cease to exist in their current form, by government bailout or otherwise.

Here is the chart:



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s