Russia Sells 80% of US Debt Holdings

July 30, 2018 Share Print 0

Russia has rapidly sold off the vast majority of its stash of American debt.

Between March and May, Russia’s holdings of US Treasury bonds plummeted by $81 billion, representing 84% of its total US debt holdings.

The sudden debt dump may have contributed to a short-term spike in Treasury rates that spooked the market. 10-year Treasury yields topped 3% in April for the first time since 2014.

It also sparked a guessing game about Moscow’s motivations. Maybe Russia just wanted to diversify its portfolio, as the central bank stated. Or perhaps Russia was seeking revenge for Washington’s crippling sanctions on aluminum maker Rusal.

Either way, there’s little debate over the long-term impact. Russia’s selling has not hurt America’s ability to borrow money.

That’s because investors — particularly life insurers and pension funds that serve aging baby boomers — have a big appetite for fixed income. Treasury rates quickly descended back below 3% because demand for bonds continued to grow.

via CNN

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.