Foreign Holdings of U.S. Government Debt Fall by Most Since 2017
November 19 2019 - 1:48PM
Dow Jones News
By Daniel Kruger
Holdings of U.S. government debt by overseas investors declined
the most in almost two years in September as yields on Treasurys
climbed from near-record lows.
Foreign holdings of Treasury debt declined 1.2% to $6.78
trillion, the biggest drop since the end of 2017, according to data
released by the Treasury Department late Monday. Demand for the
debt from foreign investors at September's auctions of new
Treasurys was the lowest since before the financial crisis,
according to separate data from the agency.
The yield on the benchmark 10-year Treasury note was a recent
1.793%, according to Tradeweb, compared with 1.808% Monday. It
reached a multiyear low of 1.456% in early September.
"Foreign ownership of Treasurys hasn't kept pace with issuance,"
said Jon Hill, a government debt strategist at BMO Capital
Markets.
The decline in holdings was led by foreign central banks.
Officials in some emerging markets could have been selling U.S.
assets to defend their currencies against the dollar, Mr. Hill
said.
Foreign holdings of U.S. government debt are still rising at the
fastest pace in years amid demand from private investors who have
purchased the securities without hedging the risk of buying the
debt in U.S. dollars.
Yields on 10-year Treasurys have been more than 2 percentage
points higher than German debt of the same maturity throughout the
year. That has made U.S. debt increasingly attractive as yields
have fallen to record lows throughout Europe.
The recent jump in Treasury yields, which rise when bond prices
fall, was matched by an increase in yields on sovereign debt in
Europe. That carried yields up from recent record lows below zero
reached after investors' worries about slowing global growth pushed
them toward the relative safety of government debt.
The WSJ Dollar Index, which measures the U.S. currency against a
basket of 16 others, reached a multiyear high at the end of
September. It traded at a recent 90.75, down 1.6% from its Sept. 30
high, and less than 0.1% from Monday.
Write to Daniel Kruger at Daniel.Kruger@wsj.com
(END) Dow Jones Newswires
November 19, 2019 13:33 ET (18:33 GMT)
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