In October, China was about the only central bank adding to its reserves (I suspect, it hasn’t formally released its reserves data). Most central banks were selling. That shows up in the US TIC data. South Korea, Brazil, Mexico, Russia and Ukraine were all net sellers of long-term US Treasury bonds …
The big central bank flow was a reallocation away from Agencies toward Treasuries. And specifically toward short-term Treasury bills.
China increased its holdings of short-term Treasury bills by a stunning $56 billion while also buying $10 billion of long-term Treasuries. That flow alone would have been enough to cover the trade deficit in the absence of any offsetting outflows.
You have got to admire China’s determination to make this all work. But how much longer can the prop us up.
(I know, I know, people can stay stupid for longer then I think. But I have to believe they are pushing their limit)