tag:blogger.com,1999:blog-970611666708740586.post1114625471097130468..comments2023-08-28T11:48:39.554-07:00Comments on Reserved Place: Beware rising custody holdingsRebelEconomisthttp://www.blogger.com/profile/13241098878248190971noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-970611666708740586.post-45755321419994399562010-04-12T10:11:06.665-07:002010-04-12T10:11:06.665-07:00I recently came across your blog and have been rea...I recently came across your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.buy viagrahttp://www.xlpharmacy.com/noreply@blogger.comtag:blogger.com,1999:blog-970611666708740586.post-64122682933335419502008-10-17T03:15:00.000-07:002008-10-17T03:15:00.000-07:00anonymous at 05 October 2008 22:38,You are right t...anonymous at 05 October 2008 22:38,<BR/><BR/>You are right that the crisis is hitting foreign holders of US assets, but it seems to me that this is going to amount to far less than the impact that it will have on US-owned assets. This includes both domestic assets, from financial assets like company shares to tangible assets such as idled factories etc, and foreign assets such as US holdings of emerging market stocks (ie "dark matter"), which have in many cases fallen further than the US market. I doubt that the Americans deliberately generated the crisis to stuff foreigners!<BR/><BR/>Another point that I often make (see <A HREF="http://reservedplace.blogspot.com/2008/01/it-is-often-asserted-eg-in-brad-setsers.html" REL="nofollow">my first ever post</A>) is that the market tends to win in the end. If the US cheats its foreign creditors, they will demand a risk premium in future that may well end up costing the US more than its immediate gain. The only way of getting away with cheating your creditors is to avoid depending on them ever again (or at least until they forget what you did), and frankly, I cannot see the Americans having the grit to abruptly stop consuming more than they produce and not relapsing.RebelEconomisthttps://www.blogger.com/profile/13241098878248190971noreply@blogger.comtag:blogger.com,1999:blog-970611666708740586.post-91220221696519318042008-10-17T02:26:00.000-07:002008-10-17T02:26:00.000-07:00Hoosierdaddy,Nice idea. A central bank wishing to...Hoosierdaddy,<BR/><BR/>Nice idea. A central bank wishing to disguise a pull-out of treasuries could sell them and reinvest the proceeds in treasury repo (reverse repo, to be precise) to avoid the impact of their sales appearing in the custody holdings. To the extent that this increased the overall central bank (settled, but not done) holdings of treasuries because another central bank bought some of the treasuries sold, this might increase Fed custody holdings overall. However, it seems to me that any central bank with a large enough holding of treasuries to care about the impact of their sales on the custody holdings report would face a larger problem concealing the extent of their sales from the market.<BR/><BR/>A similar explanation might be that some central banks are wary about letting the private sector, or their custodian at least, know what they are holding, and therefore direct new purchases, or even transfer existing holdings, to the Fed.<BR/><BR/>An altogether more sinister reason for increases in Fed custody holdings that might interest your suspicious mind is that the Fed might be being used in a repo squeeze. If you want to fund your holding of a particular treasury issue in repo without the issue being lent in the specials market, lend it to a central bank that invests in reverse repo and does not lend its securities (in which case they are likely to be held at the Fed).RebelEconomisthttps://www.blogger.com/profile/13241098878248190971noreply@blogger.comtag:blogger.com,1999:blog-970611666708740586.post-85446425310177644052008-10-07T10:48:00.000-07:002008-10-07T10:48:00.000-07:00Explanations: Report lines & T account flows:“...Explanations: Report lines & T account flows:<BR/><BR/>“Modern Money Mechanics” — Changes in Foreign-Related-Factors:<BR/>#41 & #38 SWAP LINESSalmo Truttahttps://www.blogger.com/profile/13910212017849902362noreply@blogger.comtag:blogger.com,1999:blog-970611666708740586.post-22680119844097466152008-10-05T22:38:00.000-07:002008-10-05T22:38:00.000-07:00this crisis is making the US wealthier in comparis...this crisis is making the US wealthier in comparison to rest of the world, and to Europe.<BR/><BR/>Here is briefly why:<BR/><BR/>1. US bonds have risen in price (lower yield).<BR/>2. Dollar has strengthened.<BR/>3. Dum money managers from overseas are holding the bag handed to them via mortgages, and low or worthless stocks they bought at the top.<BR/>4. Stock/corporate bonds can be destructed, but not the dollar (at least so far).<BR/><BR/>5. Corrollary: cash is in the hand of USA. Rest of the world has lost, and US can raise money (by selling bonds at low yield).<BR/><BR/>So all is good for USA when compared to others.<BR/><BR/>Insight is from:<BR/><BR/>http://financialtraders.blogspot.comAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-970611666708740586.post-10180531698651873482008-10-04T17:30:00.000-07:002008-10-04T17:30:00.000-07:00If I were a Sovereign looking to reduce dollar exp...If I were a Sovereign looking to reduce dollar exposure without triggering a rush to the exits it seems like for a time you could game the system by holding steady or slightly boosting the amount stored at the NY Fed while cutting back on the purchases of (or even selling) dollar assets through other intermediariesHoosierDaddyhttps://www.blogger.com/profile/06070310058834687381noreply@blogger.comtag:blogger.com,1999:blog-970611666708740586.post-25379290464913599952008-10-01T08:39:00.000-07:002008-10-01T08:39:00.000-07:00IIRC, the swap lines now stand at $620bn, with a w...IIRC, the swap lines now stand at $620bn, with a wider range of foreign CBs, so presumably there'll be a commensurate effect on custody holdings.<BR/><BR/>Thank you for a very useful post.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-970611666708740586.post-68094514165348232602008-09-27T09:10:00.000-07:002008-09-27T09:10:00.000-07:00anonymous,Here is what I think is going on: The s...anonymous,<BR/><BR/>Here is what I think is going on: The swaps, which (now) involve a Fed dollar asset comprising $290bn in the central bank accounts at the Fed and a Fed foreign currency liability of equal value, presumably in accounts created for the Fed in the corresponding central banks, do not seem to appear on the H.4.1 report (there is no item that large which is not obviously something else). There will therefore be no trace on the balance sheet when the foreign central banks draw down their swap-related dollar accounts to lend to their banks. This lending by foreign central banks does represent dollar credit extension, but the Fed will offset it in their own operations (eg by lending less), so there will not be a rise in reported Fed dollar liabilities as a result. Nevertheless, any treasuries or agencies taken as collateral by the foreign central banks will probably be placed in safe custody with the Fed, and so will appear in the custody holdings (which are also off balance sheet).RebelEconomisthttps://www.blogger.com/profile/13241098878248190971noreply@blogger.comtag:blogger.com,1999:blog-970611666708740586.post-27862144308737491472008-09-27T06:05:00.000-07:002008-09-27T06:05:00.000-07:00Rebel -- My sense is that the swaps worked the oth...Rebel -- <BR/><BR/>My sense is that the swaps worked the other way: the ECB/ others posted euro collateral to borrow dollars from the fed. so the net effect was even more dollar credit extension, as the ECB/ BoE others supplied dollars to European institutions.<BR/><BR/>I don't think this would have an impact on the custodial data.<BR/><BR/>but let me work through this moreAnonymousnoreply@blogger.com