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?