Tuesday, July 31, 2018

Why Is Russia Cashing Out Its U.S. Treasury Securities ?

The chart above shows the U.S. treasury securities held by Russia from 2011 through May of 2018. Note the sharp drop on the right side of the chart. Russia has sold off most of their holdings recently -- going from $96.1 billion to only $14.9 billion.

That sell off has mystified investors, since the interest rates on U.S. Treasury securities is still high, and Trump's recent overtures to Putin would seem to make those investments even better than in the past.

Were the Russians trying to affect the U.S. market? If so, they failed, since the market has remained stable. Is their economy in enough trouble that they needed to bring that money home? Maybe.

But there could be a much more ominous reason. Maybe Putin is planning a military move (Syria?,the Ukraine?, the Balkans?, etc.) that he knows will upset the U.S. Congress. Maybe he is moving that money before Congress can freeze it with some kind of sanction.

It would be good to know why this is happening.

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