October 18, 2016 / 9:16 PM / in a year

UPDATE 1-Foreigners sold U.S. Treasuries for 5th month -data

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By Gertrude Chavez-Dreyfuss

NEW YORK, Oct 18 (Reuters) - Foreigners sold U.S. Treasury bonds and notes for a fifth straight month in August, data from the U.S. Treasury department showed on Tuesday, with risk appetite improving as the fallout from Britain’s exit from the European Union was viewed as less severe than expected.

“Some of the selling pressure in Treasuries might have been less concern about Brexit issues, while stocks continued to see inflows,” said Kim Rupert, managing director for global fixed income at Action Economics in San Francisco.

U.S. Treasury debt outflows totaled $24.78 billion in August, from $13.1 billion in July. From April to August, foreign investors sold more than $160 billion in U.S. Treasuries, data showed.

Foreign official institutions, which include central banks, sold $44.16 billion in U.S. government bonds, the largest outflow since February. Private offshore investors, on the other hand, bought $20.28 billion.

Yields on U.S. 10-year Treasury notes at the beginning of August were 1.4970 percent. By the end of the month, yields rose 7 basis points to 1.5680 percent.

The data also showed China’s holdings of U.S. Treasuries declined for a third straight month in August to $1.185 trillion, its smallest since November 2012. The world’s second largest economy, however, remained the largest holder of U.S. government debt.

The drop in China’s Treasuries holdings has raised questions about how much Beijing may be spending from its currency reserves to support the yuan.

Japan, the second largest foreign U.S. Treasury debt holder, posted holdings of $1.144 trillion, down from $1.154 trillion in July.

U.S. stocks, meanwhile, posted inflows for a second consecutive month, totaling $2.73 billion for August, from inflows of $26.06 billion the previous month.

Overall, foreigners bought long-term U.S. securities for a second straight month in August.

Offshore investors purchased $48.3 billion in long-term U.S assets in August after buying $102.8 the previous month. Including shorter-dated securities, overseas investors bought $73.8 billion, after buying $118 billion in July. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Alan Crosby and Lisa Shumaker)

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