April 17, 2017 / 9:13 PM / 4 months ago

UPDATE 1-Foreigners sell U.S. Treasuries in February -data

(Recasts with foreigners selling Treasuries; adds details, comment, byline)

By Gertrude Chavez-Dreyfuss

NEW YORK, April 17 (Reuters) - Foreigners sold Treasuries in February for a third straight month, data from the U.S. Treasury department showed on Monday, continuing a trend that has been in place since Donald Trump's election as president in November.

The U.S. Treasury debt market showed an outflow of $13.5 billion, with both private investors and foreign official institutions such as central banks selling the country's government bonds.

"We had a significant change in sentiment on interest rates and the Federal Reserve, especially toward the end of the month, because we had good economic data," said Tom Simons, money market economist, at Jefferies & Co in New York.

"At the same time, nothing negative had come out of Washington yet and so we were still riding that optimism about Trump," he added.

Yields on U.S. benchmark 10-year Treasury notes at the beginning of February were at 2.474 percent, hitting a high of 2.524 and ending the month at 2.358 percent. On Monday, U.S. 10-year yields fell as low as 2.187 percent, a five-month trough. But yields eventually recovered on Monday to end the day at 2.249 percent.

The data also showed China increased its U.S. Treasury holdings by roughly $8.6 billion to $1.059 trillion in February, making it the second-largest non-U.S. holder of U.S. government debt. China has sold Treasuries in six of the last nine months.

For a fifth straight month, Japan was the largest non-U.S. holder of U.S. Treasuries, with $1.115 trillion. Japan raised its Treasury holdings for a second consecutive month.

Overall, foreign central banks boosted their holdings of U.S. Treasuries to $6.012 trillion in February, from $5.953 trillion a month earlier.

Foreign investors also bought U.S. stocks during the month to the tune of $19.1 billion up from $15.4 billion in January.

Data also showed offshore investors purchased $53.4 billion in long-term U.S. assets in February after buying $5.9 billion the previous month. Net overseas inflows, including shorter-dated securities, totaled $19.3 billion in February, down from $121.2 billion in January. (Reporting by Gertrude Chavez-Dreyfuss; editing by Dan Grebler and Lisa Shumaker)

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