Central banks may be diversifying away from the dollar, but they are still buying more U.S. Treasury bills than ever. This may seem impossible until you look at central bank reserve growth in 2008 and realize that there may not be enough U.S. Treasuries to satiate the explosion in worldwide reserve growth.

The People's Bank of China's reserves increased $230bn in the first four months of 2008 - a figure beyond imagination just a couple years ago. The majority of sovereign wealth is still invested in safe and liquid US Treasuries.

Snapshot asks, will sovereign investors ever change their ways?

Bloomberg - Asia Biggest Bear on Treasuries as Yields Boost Bunds
Guardian - As FX reserves pile up, so do China's problems
Brad Setser - It is 2004 all over again. Central banks haven't shifted away from safe, liquid assets