One month ago, when we last looked at the Fed’s update of Treasuries held in custody, we noted something troubling: the number dropped sharply, declining by over $27.5 billion in one week, the biggest weekly drop since January 2015, pushing the total amount of custodial paper to $2.83 trillion, the lowest since 2012. One month later, we refresh this chart and find that in the latest weekly update, foreign central banks continued their relentless liquidation of US paper held in

the Fed’s custody account, which tumbled by another $22.3 billion in the past week, pushing the total amount of custodial paper to $2.805 trillion, another fresh post-2012 low. Then today, in addition to the Fed’s custody data, we also got the latest monthly Treasury International Capital data, which showed that the troubling trend presented last one month ago, has accelerated. FULL REPORT