Is China And Japan Bailing Out Of U.S. Treasuries?

The sun rises to the east of the U.S. Federal Reserve building in Washington, July 31, 2013. REUTERS/Jonathan Erns

China, Japan Lead Record Outflow From Treasuries In June -- Reuters

(Reuters) - China and Japan led an exodus from U.S. Treasuries in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasuries.

The sales were part of $66.9 billion of net sales by foreigners of long-term U.S. securities in June, a fifth straight month of outflows and the largest since August 2007, U.S. Treasury Department data showed on Thursday.

China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.

Comments from Federal Reserve Chairman Ben Bernanke on May 22 that the central bank could reduce its asset buying program by September fueled a sell-off in U.S. Treasuries.

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My Comment: If these numbers continue .... and the exodus of money leaving the U.S. shows no sign of stopping .... expect Washington and the major banks to shiver in fear.