Of course this week's posts hardly represent the first time we've touched on the issue of FX reserve liquidation and its implications for global finance. Here, for those curious, are links to previous discussions:

China Dumps Record $143 Billion In US Treasurys In Three Months Via Belgium

China's Record Dumping Of US Treasuries Leaves Goldman Speechless

How The Petrodollar Quietly Died And Nobody Noticed

Why It Really All Comes Down To The Death Of The Petrodollar

Devaluation Stunner: China Has Dumped $100 Billion In Treasurys In The Past Two Weeks

What China's Treasury Liquidation Means: $1 Trillion QE In Reverse

It's Official: China Confirms It Has Begun Liquidating Treasuries, Warns Washington

And so on and so forth.

In short, stabilizing the currency in the wake of the August 11 devaluation has precipitated the liquidation of more than $100 billion in USTs in the space of just two weeks, doubling the total sold during the first half of the year. 

In the end, the estimated size of the RMB carry trade could mean that before it's all over, China will liquidate as much as $1 trillion in US paper, which, as we noted on Thursday evening, would effectively negate 60% of QE3 and put somewhere in the neighborhood of 200bps worth of upward pressure on 10Y yields.