Second, the three horsemen of China, Japan, and United Kingdom continue to be big buyers of US Treasury securities. Their slow and steady accumulation from 49% to 54% of all Treasury debt held by foreigners since the onset of crisis represents their importance in maintaining demand.
Concentration by horsemen, however, doesn’t come without concerns. As concentration by specific sovereign nations rises, who really controls the US policies and global intentions? It won’t be long before this setup is recognized a legitimate threat to national security.
FOREIGN PURCHASES AND SALES OF LONG-TERM DOMESTIC AND FOREIGN SECURITIES BY TYPE
Major Foreigner Holders of US Treasury Securities: The Three Horsemen
Headline: Treasurys Dip On Cautious Optimism; TIC Shows Foreign Selling
NEW YORK (Dow Jones)--Data released Monday show the first monthly decline in foreign investors' Treasurys holding in more than two years, but a subset of the numbers prove that some major countries, including China and the U.K, are still net buyers of U.S. paper. This hints at the fact that even though U.S. government debt isn't completely impervious to the country's political drama, it's still the world's safe-haven.
Treasurys were under water throughout Monday's light-volume session as investors tiptoed into riskier assets. Benchmark 10-year notes shed 20/32 in price to yield 2.308%, by late-afternoon trading, while 30-year bonds lost 1 7/32 to yield 3.770%. Bond prices and yields move inversely.
The latest Treasury International Capital (TIC) report shows private foreign investors cut $18.3 billion worth of their U.S. Treasurys holdings in June--that's the most shedding since June 2000. The selling came as U.S. lawmakers tussled for weeks over a deficit-reduction plan, escalating fears that the world's largest economy might default on its debt and lose its top credit rating.
"It certainly showed that events in Washington really took a toll on investor sentiment," said Millan Mulraine, senior strategist at TD Securities.
Source: online.wsj.com
