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In 2022 the bond market crash saw the value of central banks' Treasuries holdings plunge by $435 billion, Bertaut and Judson's estimates show. This doesn't suggest central banks are dumping Treasuries, be it for financial or political reasons. What's more, these figures don't account for what analysts describe as stealth or shadow central bank demand not included in the official data. Reuters Image Acquire Licensing RightsIt is undeniable, however, that the collective central bank footprint in the Treasuries market is nowhere near what it used to be. For now, central banks are still buying, just not as much as they used to.

Persons: Abraham Lincoln, Gary Cameron, chunky, Carol Bertaut, Ruth Judson, That's, Steven Englander, Judson, Lehman Brothers, Jamie McGeever, David Holmes Organizations: Engraving, REUTERS, Rights, U.S, of America, Bank of America, BANK, Standard Chartered, Treasuries, Fed, ICE, Treasury, Reuters, Thomson Locations: Washington, Rights ORLANDO , Florida, Beijing, China, Saudi Arabia, American Republic, North America, Belgium

Reuters Image Acquire Licensing RightsReuters Image Acquire Licensing RightsReuters Image Acquire Licensing RightsTo be sure, Japan and China are still forces to be reckoned with. But they don't bestride the Treasuries market like they once did, nor does the threat of them selling strike the same fear into bond investors, global markets at large, and even policymakers in Washington. China's Treasuries holdings fell a valuation-adjusted $34 billion in the first half of the year, although its U.S. agency debt holdings rose nearly $20 billion. Reuters Image Acquire Licensing RightsReuters Image Acquire Licensing RightsWith U.S. bond yields at their highest since the late 2000s, the widening yield gap is pushing the yuan and yen to historically low levels against the dollar. Speculation is rising that Beijing or Tokyo could soon dip into their Treasuries holdings to fund dollar-selling intervention in the currency market.

Persons: Kim Hong, Brad Setser, Carol Bertaut, Ruth Judson, Judson, Jamie McGeever, Jonathan Oatis Organizations: South Korean, REUTERS, Rights, Treasuries, . Treasury, Federal Reserve, Reuters, of Foreign Relations, Treasury, U.S, Bank of America, Thomson Locations: Rights ORLANDO , Florida, Japan, China, Belgium, Britain, Washington, Foreign, U.S, Beijing, Tokyo

Analysis of global central bank coffers does show the dollar's share of overall reserve holdings is gradually being chipped away - but the official sector is not selling dollar-denominated assets. In fact it's still buying them on aggregate, and the private sector is too. The overseas private sector was also a solid buyer of U.S. agency debt, further calling into question the narrative in some market quarters that the dollar's status as the world's preeminent currency is rapidly eroding. Jen calculates that the dollar's share of official global reserves slumped to 47% last year, down from 55% the year before and 73% in 2001. Including the private sector, total foreign inflows into Treasuries over the past two years have been substantial.

ORLANDO, Fla., Feb 22 (Reuters) - Although China's selling of U.S. Treasury securities over the past year raises multiple geopolitical questions, it's merely switching to other dollar bonds - casting doubt about a more alarming strategic investment shift. Beijing's stash of U.S. government bonds ended last year at $862.3 billion, the lowest since May, 2010, according to Refinitiv data. Meanwhile, China's holdings of U.S. agency bonds last year rose by $50.9 billion and valuation effects accounted for $34.8 billion. This means the real increase was $85.9 billion, substantially more than the decline in Treasuries holdings. "Maybe the big story is there is no sign that China's dollar holding portfolio has changed much.

It is true that an increasing number of central banks are intervening in the currency market to sell dollars, and the nominal value of their FX reserves and U.S. Treasury holdings has declined. "Official holdings are falling, but not because central banks are selling. Central banks bought into that downturn but it is unclear whether that continued through August and September, when the BofA Treasuries index lost another 6% and central banks' FX intervention picked up pace. China and Japan, the world's biggest holders of FX reserves, have released September reserves data but neither give a breakdown of currency or asset composition. The nominal value of China's FX reserves stood at $3.029 trillion in September, the lowest since March 2017.

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