Tags: Fed | Holdings | Russia | Speculation

Record Fall in Fed Holdings Fuels Russia Speculation

Sunday, 16 Mar 2014 11:15 AM

A drop in U.S. government securities held in custody at the Federal Reserve by the most on record is fueling speculation that Russia may have shifted its holdings out of the U.S. as Western nations threaten sanctions.

Treasurys held in custody at the Fed by foreign central banks dropped by $104 billion to $2.86 trillion in the week ending March 12, according to Fed data, as the turmoil in Ukraine intensified. As of December, Russia held $138.6 billion of Treasurys, making it the ninth largest country holder. Russia’s holdings are about 1 percent of the $12.3 trillion in marketable Treasurys outstanding, according to data compiled by Bloomberg.

“The timing of the drop in custody holdings makes Russia a more likely suspect,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in a telephone interview. “If Russia did it, then they may have transferred the holdings to another bank outside of the U.S.”

Editor's Note: Grow Your Savings When The Market Grows Without Risking Principal

Estonian Defense Minister Urmas Reinsalu said Friday that Russian President Vladimir Putin is preparing to invade Ukraine as Crimea readies for a March 16 referendum on splitting from Ukraine after Russia seized the peninsula.

“Escalating talk of sanctions over the Ukraine conflict would give it every reason to move those holdings to an off-shore custodian,” according to Wrightson ICAP, referring to Russia.

The previous biggest drop in Fed custody holdings was $32 billion in June after the central bank indicated they may reduce purchases of Treasurys.

“How much more room it has to go depends on who’s doing the shift,” said Shyam Rajan, rates strategist in New York at Bank of America Corp. “It could just be a shift in where they hold Treasurys as opposed to outright selling. If they had sold we would have been much higher in yields this week. We’ve seen a rally.”

© Copyright 2017 Bloomberg News. All rights reserved.

   
1Like our page
2Share
StreetTalk
An record drop in U.S. government securities held in custody at the Federal Reserve is fueling speculation that Russia may have shifted its holdings out of the U.S. as Western nations threaten sanctions.
Fed, Holdings, Russia, Speculation
314
2014-15-16
Sunday, 16 Mar 2014 11:15 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved