The Truth about Treasurys

Peter Boockvar has a problem with the current narrative surrounding the US bond market. Mainly because the narrative is false…

Just out, for the 3^rd straight month in June there was large net foreign selling of US Treasury notes and bonds. In June, foreigners sold $33b worth of notes and bonds after selling $18.3b in May and $75B in April. This brings the year to date selling to $143b, the most on record in any 6 month time frame. This compares to net selling of $20b in 2015 and purchases of $165b in 2014, $41b in 2013 and over $400b in both 2011 and 2012. In notes and bonds, the 2 largest holders, China and Japan were both net sellers. If we include Hong Kong, these 3 regions sold a net $52 of notes and bonds. Japan was a big buyer of bills which more than offset their selling of longer maturities. Looking at Europe and their suffocating problem of negative interest rates, barely any money came into US notes and bonds. They bought a net $950m with an M.

Bottom line, this wall of money that so many have thought has been piling into US Treasuries in order to pick up some yield is not at all evident in this data and in fact, the exact opposite is happening.

Source:

Peter Boockvar
Managing Director and Chief Market Analyst

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The Jaws of Life (TRB)