Foreign Appetite For U.S. Securities Has Taken a Drubbing

https://assets.bwbx.io/images/users/iqjWHBFdfxIU/iokL_OGlBZ4o/v0/-1x-1.png

Chinese and Middle Eastern investors have other priorities.

It wasn’t supposed to be this way.

When the Federal Reserve hiked benchmark rates in December, the initial jump in the short-end of the nominal U.S. yield curve raised expectations that foreign buyers would snap up the country’s assets, thanks to their yield relative to those of other developed markets ravaged by low policy rates.

In fact, net foreign flows to the U.S. have been decidedly weak this year, thanks to an exodus by foreign central banks and sovereign wealth funds, who’ve been dumping U.S. securities in order to raise cash to put to work at home. Continue reading

China Dumping More Than Treasuries as U.S. Stocks Join Fire Sale

https://assets.bwbx.io/images/users/iqjWHBFdfxIU/ixRoB5i_TT0E/v2/-1x-1.png

 

For the past year, Chinese selling of Treasuries has vexed investors and served as a gauge of the health of the world’s second-largest economy.

The People’s Bank of China, owner of the world’s biggest foreign-exchange reserves, burnt through 20 percent of its war chest since 2014, dumping about $250 billion of U.S. government debt and using the funds to support the yuan and stem capital outflows.

While China’s sales of Treasuries have slowed, its holdings of U.S. equities are now showing steep declines. Continue reading