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Foreign Public Institutions Selling US Government Bonds En Masse

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Foreign Public Institutions Selling US Government Bonds En Masse by by Eric Bush, CFA – Gavekal Capital Blog

Before we dive into the latest release, remember that TIC data is very volatile and significant revisions. But with that said, foreign public institutions sold a record amount of treasury bonds and notes in January. Over $57 billion was sold in January following a record setting $48 billion was sold in December. Other than in November 2015, public foreigners have been net sellers of US debt in every month since October 2014 and have sold over $300 billion in aggregate during this period. This string of selling is by far the most on record going back to 1978. What may be even more remarkable, however, is that since October 2014 10-year US treasury yields have actually fallen by 48 bps even in the face of this foreign selling.

Private foreigners offset the public selling a bit by purchasing nearly $7 billion in January. Private foreigners were also net buyers of agency debt, corporate debt and US equities. Overall, however, January marked the second consecutive month that foreigners were net sellers of US long-term securities.

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