Is the Iran war prompting some non-American governments to ditch dollar debt? That question has recently hovered over the markets, amid weak Treasury auctions — and a near-50 basis point jump in 10-year bond yields since the war started (albeit now slightly reversed).
And the FT has now also revealed that non-US central banks have sold $82bn worth of Treasuries since the war started, according to Federal Reserve custody data. That leaves their $2.7tn holdings at the lowest level since 2012.
Of course, $82bn is a piddling amount in the grander scheme of things. And those custody statistics slightly jar with the better-known Treasury International Capital (TIC) cross-border data. Moreover, central bank sales probably reflect a need to amass a defensive war chest in turbulent times, rather than anti-US sentiment. Some central banks, like the Polish one, are selling gold for that reason.