The Opposite View on Quantitative Tightening

There are other criticism against so-called quantitative tightening.
According to LSR, some evidences underpin their opposite view on it.

LSR suggests declining global foreign reserves had not caused soaring UST 10 year yield during recent a decade with a left hand side graph. They argue the environment been with declines in foreign reserves mostly had led risk aversion trading made US treasury bond yield lower.

But, I think their calculation using change rate year over year is not adequate because the difference seems not significant. The change of global foreign reserves should been compared in longer term as I and many participants suggest the main difference between 2004 and now, both of ahead of Fed monetary tightening.

On the right hand side graph, LSR argues demands for long-end tenor US treausry bond are sufficient. They provide higher participation rate of amount accepted indirect bidders, considered as foreign main investors' demand including central banks and mutual funds, on 10 year and 30 year tenor.

However, I think there somewhat fault in their analysis.

Higher accepted indirect bid could be caused by lower amount of direct bid. So, we should check not accepted bidder amount, but tendered bidder amount considering whole size of bidders. See the below charts.

Direct Bidder Amount Tendered in 30 year Auction

In 30 year treasury bill auction, direct bidder amount tendered decreased sharply since start of this year. Higher indirect bidder acceptances maybe were caused by this.

Indirect Bidder Amount Tendered in 30 year Auction

In contrast of LSR's graph, this chart shows real amount of indirect bidders tendered is not higher than start of this year.

Indirect Bidder Amount Tendered in 10 year Auction

Even in 10 year tenor, the indirect bidder amount tendered started to decrease since May shown in this graph.

I will ask LSR about this...