Zero Hedge article China and Japan sell Most US Paper in Years.

The Fed may be talking tapering but China and Japan seem to be doing the real thing. They are still buying some longer term coupons but selling shorter term with it being net selling.

"Regardless of the factor, the reality is that America's creditors are saying goodbye just at a time when Bernanke is preparing to taper. The bottom line: Grand total foreign TSY holdings dropped to just over $5.600 trillion, down $57 billion in one month, and the lowest total in 2013."

More than the text above, the chart in the article gives a better picture of the current situation.

Keep an eye on it. The US government bond market will the the canary in the coal mine. So far so good, but if the selling accelerates it could start a self reinforcing feedback loop. Foreign selling forces the Fed to buy even more securities (as long as they want to keep interest rates low like they claim). The Fed buying ever more of US debt (essentially monetizing it if their book can never be unwound) will cause even more consternation with foreign holders, them realizing they are holding a depreciating asset. And the loop starts over.

This is not going to end well.

Edit: some people have been having problems with virus at the Zero Hedge site. I have not had any. I use Firefox (not saying you should, just what I use) and AVG and keep both current on updates. If you go to ZH site, might want to be sure you are up to date as browsers regularly update to close security problems that older browsers might have.

John