Emerging Market central banks cut their reserve holdings denominated in Euros by $45 billion, or 8%, during 2012. Reserve holdings can be seen as a proxy for a countries’ perception as being safe, liquid and a store of value. The Euro was at one point thought to be a legitimate rival to the U.S. dollar as the global reserve currency. However, the sovereign debt crisis has severely damaged that notion as Euros account for only 24% percent of global reserves down from 31% in 2009. In contrast, the US dollar has held steady around 60%. Reserves are desirable if they are liquid during a crisis, and Treasuries continue to show this resilience, rallying from a yield peak of 2.08% earlier this year to 1.85% this morning amid headlines about Cyprus (the small but troubled Eurozone country). Foreign central bank holdings of Treasuries are up 2.4% this quarter. The above data points on Treasuries highlight not only the way in which global events can affect our rates market, but also the global belief in the American engine of growth story as our economy is one of the only among developed countries to show improving fundamental strength of any kind.