Time for a monthly look at how all the USD zombies are doing in the Treasury's report of major foreign holders.
Mexico fell almost another $10B in a month now down to about $40B.... Canada holding their own...
Trump better hurry up and get his USDs to build the wall while he still can Mexico is bleeding USDs (if zombies can actually bleed? have to check that...) and are headed to Venezuela-ville if they run out...
So what's the story on why the central bank of Mexico is unwinding their treasury holdings? Is it due to capital flight from Mexico into US dollars? Capital flight in that direction would make the US dollar stronger compared to the peso, which the central bank of Mexico might want to mitigate through the unwind.
ReplyDeleteMay not be CB,...
ReplyDelete"Capital flight" : Metaphor.... and improper use of metaphor....
My "zombie" metaphor is appropriate use...
So US is still running a trade deficit in goods with Mexico. Just increased to $7B for March. In which case, how is this $7B in US dollars getting repatriated back to the US? Because obviously they're not buying US treasuries.
ReplyDeleteYou have to run through the accounting... the ITAs are converted into USDs via average exchange rate over some ex post period.... so if the exchange rate is volatile this could make it report a deficit via this ITA Accrual Basis meanwhile we can see a reduction in Cash basis here....
ReplyDeleteThis is a good reference:
ReplyDeletehttps://www.bea.gov/international/pdf/bach_concepts_methods/Methodology.pdf#page=5
Thank You! Will read.
ReplyDelete