UPDATE 1-Foreign cenbanks’ Treasury holdings hit record
August 8th, 2008 | by admin |(Recasts, adds quote)
NEW YORK, Aug 7 (Reuters) - Foreign central banks’ holdingsof U.S. government debt reached a record high in the latestweek, while they trimmed their investments in agencysecurities, Federal Reserve data showed on Thursday.
Agency securities, which include debt issued by Fannie Mae(FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) and the mortgage bonds thegovernment-sponsored enterprises guarantee, have performedpoorly in the past week. They have lagged Treasuries on worriesabout Fannie Mae’s and Freddie Mac’s capital levels and theirability to buy mortgages from banks and lenders.
“This adds up to a picture of anxiety regarding the GSEs,”said Tony Crescenzi, chief bond market strategist with Miller,Tabak & Co. in New York.
This nervousness has spurred central banks and investors toscramble for safer U.S. Treasuries to cut their holdings ofagency securities.
Foreign central banks trimmed their agency holdings by$1.05 billion to $980.65 billion. They were at a record $985.94billion on July 16, the Fed said.
On the other hand, they bought $25.57 billion in Treasurydebt, bringing the total to a record $1.420 trillion, the Fedsaid.
The Fed said its combined holdings of Treasury and agencydebt kept for overseas central banks jumped $24.53 billion inthe week ended Aug. 6 to stand at $2.401 trillion, surpassingthe prior week’s record of 2.376 trillion.
Overseas central banks, particularly those in Asia, havebeen huge buyers of U.S. debt in recent years, and own over aquarter of marketable Treasuries.
