Yes, in the midst of the expanding tariff and trade war, China continues dumping US Treasuries, but here is the big shocker.

China Continues Dumping US Treasuries
(King World News) – Here is what Peter Boockvar wrote today as the world awaits the next round of monetary madness:  Seen late Friday, foreigners were net sellers again in September of US Treasury notes and bonds. This in a month where the 10 yr yield jumped to 3.06% from 2.86%. The selling totaled $11.5b which brings the net year to date buying to $90.5b, which if it holds would be the most since 2014…

China Dumps $18 Billion Of US Notes And Bonds
China really picked up the pace of selling as it shed $18.5b of notes and bonds. The buying of bills reduced the net amount of selling to $13.7b which marks the 5th month in the past 6 they’ve reduced their US bond position. At $1.15 Trillion, China holds the least amount of US Treasuries since June 2017. We saw the pace of Japanese purchases pick up in September, by a net $16.1b of notes and bonds but that was completely offset and then some by the maturation and/or selling of bills. Japan’s holdings stand at the least since 2011.

What foreigners continue to like are US government agency bonds since they yield a bit more than Treasuries and have the same guarantee essentially. Buying here totaled $29.8b, the biggest one month amount since July 2016. What they really don’t like are US stocks. Foreigners have been net sellers of US equities for 5 straight months thru September. The last time that occurred was in 2016. I do wonder why and whether FX moves has something to do with that and/or the reduced pace of QE seen from the BoJ and ECB where less money is being used in the so called ‘portfolio balance channel’.

THE BIG SHOCKER: Foreign Holdings Of US Treasuries Plunges To 40.5%
Bottom line, foreign holdings of US Treasury total marketable debt stands at 40.5% as of September. It began the year at 43%. Five years ago it stood at 49% and 10 years ago it was at 54%. The Fed, the US banks, pension funds and households certainly picked up the slack but we know the Fed has now reversed course and the level of supply is at a record pace. We need all the help we can get and foreigners are no longer a reliable source of capital for Treasuries for a variety of factors. It is also likely a reason for many months this year of very mediocre Treasury auctions where supply is swamping buyers.

Deficits don’t matter in bond bull markets a notable person once essentially said but I argue they do in bond bear markets which I believe we are currently in. …No one should have believed in the free lunch of 7 years of ZIRP and a big, fat central bank balance sheet (in addition to what’s gone on overseas). That bill was to be paid at some point and that point seems to have begun.

Also of importance…

A Major Milestone
Eric King:  “John, your company just hit a major milestone. Can you talk about that?”

CEO, John Lewins:  “That’s right, Eric.  With this latest release, K92 is now positioned with nearly 3 million ounces of gold resources at a grade of over 12 grams per tonne.  So we now have a very substantial and growing resource.  And, importantly, we are funding our massive exploration program using existing cash flow from production so the massive growth in the resource will take place without any shareholder dilution.  And speaking of growth, it is our target to double our current gold resources to a world class 6 million ounces…...more here