Last week I detailed in China Isn't the Issue with regards to the United State's need for massive demand to take down all the new Treasury issuance:
We should be less concerned with China (they NEED to buy) and more concerned
that major investors continue to pile out.
US money market funds holdings of Treasuries and Agencies rose by close to 350% in 2008, as their combined Treasury / Agency portfolio rose from from $392b to $1334b. That pace of growth of growth won’t be sustained. The large rise came from a low base.But money market funds did hold more Treasuries and Agencies ($1357b) at the end of 2008 than China ($1233b) did.
So too could an end to the surge in Treasury demand from US investors …