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2026-04-05 08:33:00
[US Treasuries Sold Off to 12-Year Low as Oil Price Shocks Force Global Central Banks to "Rob Peter to Pay Paul"] ⑴ Following the outbreak of the Iran-Iraq War, countries have been selling off US Treasury bonds to support their economies and currencies. The amount of US Treasury bonds held by foreign central banks in custody at the Federal Reserve Bank of New York has fallen to its lowest level since 2012. ⑵ Federal Reserve data shows that since February 25, the amount of US Treasury bonds held by global central banks, governments, and international institutions in custody at the Federal Reserve Bank of New York has decreased by $82 billion, down to $2.7 trillion. ⑶ Since the outbreak of the war more than a month ago, these holdings have continued to decline, highlighting how the surge in energy prices triggered by the closure of the Strait of Hormuz has severely disrupted the fiscal situation of oil-import-dependent countries and driven a broad-based rise in the US dollar. ⑷ This reduction in holdings comes at a time when some central banks are intervening in the foreign exchange market to support their currencies. Such measures typically involve selling US dollars. Megan Swaber, US interest rate strategist at Bank of America, stated, "Foreign official sectors are selling US Treasury bonds."
