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UPDATE 1-Foreigners sell U.S. Treasuries for 10 straight months -Treasury data
March 15, 2017 / 11:50 PM / 9 months ago

UPDATE 1-Foreigners sell U.S. Treasuries for 10 straight months -Treasury data

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By Gertrude Chavez-Dreyfuss

NEW YORK, March 15 (Reuters) - Foreigners sold U.S. Treasuries for a 10th straight month in January, data from the U.S. Treasury department showed on Wednesday, a trend that has been in place since the Federal Reserve started flagging interest rate hikes last year.

U.S. Treasuries showed outflows of $6.97 billion.

Foreign official institutions, which include central banks, were the biggest sellers of Treasuries, unloading $44.86 billion in U.S. government bonds, led by Germany, China, and emerging market central banks in Taiwan and India. That offset purchases by private investors for the month totaling $38.08 billion.

Gennadiy Goldberg, interest rates strategist at TD Securities in New York, said China continued to sell Treasuries in January, as it dipped into its reserves to prop a falling yuan currency.

“Net-net, Treasury flows were neutral to slightly positive,” said Goldberg, noting that foreign participation in U.S. Treasury debt auctions over the last few weeks has picked up with the run-up in yields.

Yields on U.S. benchmark 10-year Treasury notes at the beginning of December were 2.45 percent, hitting a high of 2.56 percent and ending the month at 2.45 percent. On Wednesday, U.S. 10-year yields fell to 2.49 percent, a one-week low, as the Federal Reserve signaled that further rate increases would be gradual in pace.

The rise in Treasury yields and the selloff in bonds have also coincided with the election of Donald Trump in November, which suggested more pro-growth policies such as increased infrastructure spending that could lead to more inflation.

The data also showed that China reduced its U.S. Treasury holdings by $7.3 billion to $1.051 trillion in January, making it the second-largest holder of U.S. government debt. China has sold Treasuries in seven of the last eight months.

For a fourth consecutive month, Japan was the biggest non-U.S. holder of U.S. Treasuries, with $1.102 trillion holdings.

The data also showed offshore investors bought $6.3 billion in long-term U.S. assets in January, after selling $12.9 billion the previous month. Including shorter-dated securities, foreigners bought $110.4 billion in U.S. assets in January, after selling $65.3 billion in December.

Foreign inflows into U.S. stocks, meanwhile, totaled $15.1 billion in January, after outflows of $10 billion the previous month. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Sandra Maler and Grant McCool)

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