Record Bid Hitting Taking Place in U.S. Paper, Russia Suspected

“A drop in U.S. government securities held in custody at the Federal Reserve by the most on record is fueling speculation that Russia may have shifted its holdings out of the U.S. as Western nations threaten sanctions.

Treasurys held in custody at the Fed by foreign central banks dropped by $104 billion to $2.86 trillion in the week ending March 12, according to Fed data, as the turmoil in Ukraine intensified. As of December, Russia held $138.6 billion of Treasurys, making it the ninth largest country holder. Russia’s holdings are about 1 percent of the $12.3 trillion in marketable Treasurys outstanding, according to data compiled by Bloomberg.

“The timing of the drop in custody holdings makes Russia a more likely suspect,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in a telephone interview. “If Russia did it, then they may have transferred the holdings to another bank outside of the U.S.”…..”

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