Central banks sell record sums of US debt

by Robin Wigglesworth, Michael Mackenzie, and Josh Noble, GATA:

Central banks sold a record amount of US Treasury debt last week while bond funds suffered the biggest-ever investor withdrawals as markets shuddered at the prospect of the US Federal Reserve ending its quantitative easing programme.

Holdings of US Treasuries held at the Fed on behalf of official foreign institutions dropped a record $32.4 billion to $2.93 trillion, eclipsing the prior mark of $24 billion in August 2007. It was the third week of outflows in the past four.

Private investors are also dumping fixed income. Bond funds tracked by EPFR Global, a data provider, saw total redemptions of $23.3 billion in the week to June 26. US funds were the worst hit, with withdrawals totalling $10.6 billion, but emerging market debt funds also saw record redemptions of $5.6 billion.

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