U.S. Treasuries show foreign inflows in February for 4th month

NEW YORK Reuters – Net foreign inflows into Treasuries rose for a fourth straight month in February in the amount of 75.3 billion, data from the U.S. Treasury department showed on Friday.

Of that, private overseas investors bought 91.9 billion in Treasuries and foreign official institutions sold 16.2 billion.

Foreigners have bought Treasuries in 10 of the last 12 months, including a record net monthly purchase of 118 billion in March 2021.

Overall, Treasury International Capital TIC data showed a net inflow of 162.6 billion, versus a 287.4 billion inflow in January. Of this, net foreign private inflows were 198.4 billion, and net foreign official flows were negative 35.8 billion.

The overall foreign buying came as U.S. yields rose. U.S. benchmark 10year Treasury yields peaked at 2.0650 in February, reaching the highest level since July 2019, and ended the month at 1.8216, up about 4 basis points from the end of January.

The yield on the twoyear note rose to 1.4363 in February from 1.1846 at the end of January, reaching a peak of 1.6430 that was last seen in December 2019, as markets anticipated that the Federal Reserve would imminently start hiking interest rates to slow price rises and stave off hotter inflation.

The Fed did raise its policy rate in March by 0.25 basis points, the first hike since 2018, and announced how it would reduce its 8.5 trillion balance sheet, ballooned by pandemicera bond purchases. Several more rate hikes are expected this year and next.

Foreign holdings of Treasury securities rose to 7.714 trillion from 7.661 trillion in January.

Japans holdings of Treasury securities rose by more than 3 billion to 1.306 trillion. Japan remained the largest nonU.S. holder of Treasuries.

China, the secondlargest holder of Treasuries, saw its holdings decline to 1.054 trillion from 1.060 trillion in January.