Japan stepped up their purchases of United States Treasuries during October to $105 billion dollars, boosting their total holdings of United States Treasury Issues to $731 billion, more than 10 percent of the total market. Japan and China are typically the largest purchasers, by far, of United States Treasuries.

Why do we care about this? This helps keeps interest rates low and provides support for United States borrowing. It also maintains the many-decade-long pattern of relatively low United States savings rates and relatively high Asian-country savings rates.

There is another, more current, story behind this activity. Bond holdings are insurance against expected deflation. We here at CERF have been saying that the risk of United States Deflation is higher than risk of Inflation for six months now. It is now clear we are not the only ones with this opinion.