Foreigners buy most US Treasuries since August

  • Business
  • Tuesday, 16 Apr 2019

NEW YORK: Foreigners purchased the most US Treasury securities in six months in February, suggesting some overseas appetite for low-risk government debt due to worries about a slowing US economy, the US Treasury Department released on Monday showed.

They bought $19.91 billion in Treasuries in February, marking their first net purchase in four months. In January, they sold $11.99 billion, the latest Treasury data showed.

Treasury yields fell most of February on uneasiness about U.S.-China trade friction and disappointing economic data. But they rose later that month on selling linked to $168 billion of government debt supply and a reading on fourth-quarter gross domestic product that turned out to be not as dismal as some traders feared.

Benchmark 10-year Treasury yields fell over 0.07 percentage point to 2.71% at the end of February. In late Monday trading, they were 2.554%.

"At first pass, this indicates ongoing interest despite lower outright rate levels. It's also notable that, outside the Treasury market, overseas demand for U.S. fixed income was evident in agency and corporate debt, as well," BMO Capital Markets interest rates strategist Jon Hill wrote in a research note.

Overseas accounts acquired $22.48 billion in agency debt and $10.68 billion in corporate bonds in February.

Foreigners, on the other hand, shunned U.S. stocks for 10 straight months, selling $10.67 billion in February following $31.21 billion in sales the month before.

Chinese holdings of Treasuries, meanwhile, increased in January for a third straight month to $1.131 trillion, the highest level since October.

The world's second-largest economy remained the largest foreign holder of U.S. government debt.

Japan also raised its stakes in Treasuries to $1.072 trillion in February, its highest level since November 2017.

U.S. Treasuries holdings in the United Kingdom rose to $283.8 billion, up from $273.5 billion the prior month.

Hill attributed the increase to London's importance as a financial center as well as potentially some positioning amid uncertainty over Brexit. - Reuters

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