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December 16, 2016 By Peter Boockvar

US Treasuries: Foreign selling continues

The pace of foreign selling of US Treasuries continued in October at a sharp pace. Foreigners sold a net $63.5b of notes and bonds and brings the year to date amount of liquidation to $321b. China continued its selling, by $25.7b and brings the last 5 months of selling to $109b. We know the reasons. Japan continued its selling too, by another $16.1b but they are now the largest foreign holder of US Treasuries, surpassing China. Europe was also net sellers of notes and bonds. Outside of China that has its own internal reasons for their selling, the spread pick up of buying US Treasuries has disappeared because of the high cost of hedging out the FX risk.

Bottom line, foreign selling of US Treasuries is not new as it’s been going on since 2015 but the pace has really accelerated over the past 7 months with China leading the way as they see their reserves shrink. This has been a factor in my bear case on bonds and I don’t see this reversing anytime soon.

Filed Under: Latest Data

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About Peter

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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