US China Japan

Japan has now overtaken China as top bag holder of U.S. debt. This not only shows China’s drift away from investing in the U.S.

USDebtChinaJapan

But the dire situation Japan could be facing when the long-term story of the U.S. dollar is finally told

Global Economic News 2015-04-17

Japan has now overtaken China as top bag holder of US debt. Official figures from the US Treasury Department put Japan at owning $700 million more than China who reduced their holdings over $15 Billion to $1.22 Trillion February 2015. With the President’s proposed 2016 budget not to balance ever, and the House budget not to eliminate the deficit for 9 years, the United States must seek new ways to finance debt; a scenario that is all but impossible. Unfunded Liabilities further compound the problem. The Social Security Disability Insurance trust fund is expected to go bankrupt in 2016, some have suggested diverting funds from the Old Age Survivior’s Insurance which has a later bankruptcy timeline of 2034.

In the oil market, Saudi ouptput jumped over half a million barrels per day in March, but because the dollar index shook lower, Oil sprang up to over $56 on the WTI index. A correction is likely due. Expect more US wells to shutdown throughout 2015 and perhaps 2016. OPEC production is up 2 million barrels year over year, a cut by OPEC now would be in the category of a black swan event.

Last week we reported Greece made the IMF Payment but they’re not out of the water even for April. They owe $1 billion in T-bills today and €2 billion in public sector wages and pensions by the end of the month. By June they have nearly €3 billion in IMF payments due. Greek 3 year bonds have reached 28% yield compared to 10% just 4 months ago.

CommoditiesTradeRush
In End of the Petrodollar news, The China-led Asian Infrastructure Investment Bank (AIIB) has approved 57 countries as founding members. This includes major US allies like Australia, France, Saudi Arabia and the United Kingdom. The bank is expected to be established by the end of this year.