This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Fed Surpasses China in Treasury Binge

NEW YORK ( TheStreet) -- Data released by the Treasury Department on Wednesday morning indicated that with the Fed's $972 billion in Treasury holdings it has surpassed China's $906 billion in Treasury securities. And with more QE2 purchases on the horizon, the Fed lead over China in the U.S. paper race is likely to be extended.

The Treasury data on China's total Treasury holding exposure is on a two-month lagging basis, as of October 2010. China has been selling longer-term bonds and focusing on shorter-term issues recently, a trend that was evident in the October numbers also.

As for Japan, even as its total exposure to Treasury securities increased in October to its highest level in a year -- and China remained the largest foreign holder of Treasury paper -- Japan was close to overtaking China for second place, while the Fed pulled away from both.

Market analysts and economists were saying that the most recent Treasury buying data showed less enthusiasm from foreign participants for the U.S. government paper, especially the longer-term bonds.

For months, Fed hawks have been expecting the Fed versus China event to occur, given the rapacious buying of government securities that has become synonymous with Fed policy. Still, if it was a fait accompli for the Fed to overtake China as the king of treasury holdings, it's in the least another notable moment in the long-running debate over whether the Fed's actions are leading the U.S. down a path of inflation and speculative asset bubbles.

"I'm not one of those people worried about China holding too much debt or the Fed exceeding an arbitrary benchmark, but the data shows how big the Fed has become in this market, and the market distortions that Fed buying is causing," said Nicole Gelinas, a scholar at the Manhattan Institute and one of the signers of a recent high-profile open letter sent to the Fed by think tank e21 that criticized its monetary policy.

The Manhattan Institute scholar said the real concern should be a Fed monetary policy that is hiding the truth of a financial system that is still broken. "It's not just Treasury securities but mortgage securities and everything that the Fed is buying," Gelinas said.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,803.16 +25.01 0.14%
S&P 500 2,067.75 +6.52 0.32%
NASDAQ 4,757.5990 +9.2030 0.19%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs