June 19, 2018 / 8:29 PM / 10 months ago

U.S. bond demand steady despite trade, supply concerns -Treasury source

LONDON, June 19 (Reuters) - The U.S. Treasury Department has no fundamental concerns about demand for U.S. government debt despite market worries about the recent surge in federal borrowing and fears about a global trade war, a U.S. Treasury source told Reuters on Tuesday.

Treasury issuance has jumped to finance last year’s massive tax overhaul and a spending deal passed by Congress in February.

President Donald Trump’s decision to slap tariffs on China and other nations in an effort to combat perceived unfair trade practices has raised speculation of whether some trading partners might retaliate by dumping U.S. Treasuries.

“There are no fundamental concerns about demand for U.S. Treasuries, foreign or otherwise,” the Treasury source said on the sidelines of a conference in London. “We have not seen a drop-off in liquidity, demand or shift in buying patterns.”

Foreigners sold Treasuries for a second straight month in April, according to Treasury data released on Friday. China’s U.S. bond holdings fell in April after rising in February and March. China is still the largest overseas holder of Treasuries. (Reporting by Dhara Ranasinghe in London Writing by Richard Leong Editing by Leslie Adler)

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