China Sells Long-Term Bonds In October As Foreign Inflows Moderate, Fed Untouchable At Top Of US Paper Holders List
The October TIC Data is out (although courtesy of the total and ridiculous redesign of the Treasury's website, is a complete nightmare to navigate). Net foreign purchases of US securities amounted to $54.7 billion, down from a revised $90 billion in September, and even more from $136.3 billion in August. Net foreign purchases, net of adjustments and US purchases of foreign securities, amounted to $7.2 billion, substantially lower than expectations of $51 billion. Digging through the data reveals some interesting trends, namely the purchases of LT Treasurys, while still positive, plummeted from purchases of $78.3 billion and $117 billion in the prior two months. The savings grace is that foreign purchases of Corporate Stocks remained relatively strong, at $16 billion. Looking at China we observe that the country actually sold off Long Term UST (while buying Short Term Bills): this means that the Fed, with its $966 billion in US paper is now untouchable at the top of all holders of US Treasurys.
The chart below presents just monthly purchases of Corporate Stock:
Most importantly looking at the detail in the purchases of the Big 3, we note an interesting development. While total Chinese holdings increased from $883.5 billion to $906.8 billion, more than all of this increased was in Short Term Treasury purchases ($25.4 billion), and in fact China sold $2 billion in Long-Term US Bonds in October.
and total Chinese holdings, spread by Long and Short-Term holdings
The second most important holder of US debt, Japan, bought a modest $13 billion in paper in October:
And as for the shadiest foreign buyer, the UK, which is a stomping ground for the mysterious "direct purchasers" and is either a proxy for China, US Bank, or indirect Fed buying, it was back to its old shenanigans, buying $19 billion in net bonds in October.
Most importantly, however, with October data behind us, the Fed is and continues to be the top institutional holder of US debt.