Another Sign Of A US Dollar Bottom

Bloomberg reported this morning that Russian officials commented, suggesting that they’d be reducing US Reserves and would commence buying IMF Bonds;

Russia Switch

Russia’s central bank may switch some of its reserves from U.S. Treasuries to International Monetary Fund bonds, the bank’s first deputy chairman, Alexei Ulyukayev, said in Moscow today. His comments were confirmed by a bank official who declined to be named, citing bank policy.

Finance Minister Alexei Kudrin said last month that Russia planned to buy $10 billion of IMF bonds using money from its foreign reserves.

When I read this - One thing came to mind. Would Russia be telling the world that they’re going to start selling off dollar assets ? No! If they told everyone, before they sold - then they would get less, as prices would drop immediately. My sense is that this is already priced into the markets. IMF bonds are not yet even available. It makes sense that Russia and China would be making announcements like this, right before they’re getting ready to buy US Debt.

When you look at the largest owners of US Debt - you see that there has not been any decline in the purchases of Debt by nations with surpluses. It seems that by making announcements like the one Russia made, they’ll be able to cause selloffs in the bond market, that will permit them to lock in more attractive long term rates.

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