Late on December 30, the U.S. Treasury announced that the dumping of U.S. bonds, by foreign banks, continues and is accelerating.

Back in September the Treasury revealed a $56 billion drop in U.S. Treasury holdings by foreign banks, resulting in a 10 year yield of only 1.67%, the lowest yield since 1945!

Now, for December, an even bigger drop, by $69 billion!!! The result is that the 10 year yield on U.S. Treasuries ended 2011 below 1.9%.

Treasury Department officials also admitted that if it wasn’t for Japan buying up U.S. dollars and other Treasury securities (in August and October), the drop in 2011 foreign holdings would be even bigger!

And this despite the Treasury’s attempt to increase sales through their Operation Twist.  Operation Twist basically exchanges long term bonds for shorter term bonds.