Sunday January 28, 2007

OPEC dumps $10.1 billion of treasuries as oil tumbles

bloomberg.com :

OPEC nations are unloading Treasuries at the fastest pace in more than three years as crude oil prices tumble, sending bond yields higher. Exporters including Indonesia, Saudi Arabia and Venezuela, sold 9.4%, or $10.1 billion, of their U.S. government debt securities in the three months ended in November. Oil producers have surpassed Asian central banks as the largest pool of global savings, accumulating an estimated $500 billion in 2006 alone, according to research by Pacific Investment Management Co.

OPEC members were selling Treasuries as crude prices declined 34% from a record high of $78.40 a barrel in July. They are reducing demand for U.S. government bonds at the same time as central banks from China to Romania say they want to cut holdings of dollar-denominated assets. For every $10 drop in the price of a barrel of oil, OPEC members adjust Treasury holdings by about $34 billion, according to estimates by Michael Pond, an interest-rate strategist in New York at Barclays Capital Inc.

Only Japan, China and the U.K. own more Treasuries than the 12-OPEC nations. China, the second-largest holder of U.S. debt, also is cutting back holdings. The central bank, which owned $346.5 billion of Treasuries as of November, trimmed purchases by 1.7% in the first 10 months of 2006, Treasury figures show. "The Chinese are slowing down their buying, so that leaves a big hole after the oil money," said Brenner at Hapoalim Securities.

(2007-01-28 15:27:46 SGT) [Biz] Permalink

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