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June 15, 2017 By Peter Boockvar

Foreigners are back as sellers

After buying in March for just the 2nd time in 14 months, foreigners again were back to selling US Treasury notes and bonds in April. A net $22.5b was sold bringing the year to date total to $18.8b of selling which follows $326b sold in 2016 and $20.3b in 2015. China again was a seller of notes and bonds totaling $3.4b but more than offset that by buying T-bills which actually increased their total holdings. We can consider T-bills a cash equivalent for them and the stabilization in their FX reserves didn’t lead to any new long term commitment to US paper. At least not yet. And, selling out of Kong Kong continued as well. Japan too, the largest holder of US Treasuries, continued their selling with a net amount of $8.4b of notes and bonds and also sold T-bills. Total Asian selling totaled $12.6b for notes and bonds and Europe was a large seller amounting to $17.9b.

Bottom line, for all the talk about foreign yield seekers playing in the US, it isn’t showing up in this data on a net basis. Foreign central banks have been persistent sellers while private buyers have come in and out. In April they were back out. In itself, foreign selling has really meant nothing to the US treasury market as yields of course are still very low. The question will be IF, and I emphasize IF, the Fed gets deep into QT defined as their annualized run rate limit of $600b per year, on top of this foreign selling if it continues, where will yields be then?


 

Filed Under: Latest Data

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Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.

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Disclaimer - Peter Boockvar is an independent economist and market strategist. The Boock Report is independently produced by Peter Boockvar. Peter Boockvar is also the Chief Investment Officer of Bleakley Financial Group, LLC a Registered Investment Adviser. The Boock Report and Bleakley Financial Group, LLC are separate entities. Content contained in The Boock Report newsletters should not be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market commentary is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. The views expressed in this commentary should not be taken as advice to buy, sell or hold any security. To the extent any of the content published as part of this commentary may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. No chart, graph, or other figure provided should be used to determine which securities to buy or sell. Consult your advisor about what is best for you.

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