Foreigners sold US Treasuries, corp bonds in April

Foreigners sold US long-term securities, including Treasuries and corporate bonds, in April versus buying in March, data from the US Treasury showed on Monday. The net sales of long-term US assets notched $24.2 billion in April following a net inflow of $4.1 billion the month before. Including short-dated assets such as bills, however, overseas investors bought $136.8 billion in April, reversing revised outflows of $122.3 billion in March.
Long-term US Treasuries showed an outflow of $13.59 billion from an inflow of $25.86 billion in March. This selling in notes and bonds was driven by private investors, who sold $29 billion, while officials investors bought $18.8 billion of Treasuries, the third consecutive month of buying from official accounts.
"There's lumpiness in the (US Treasuries) data and it partly reflects the issuance calendar," said Michael Woolfolk, senior market strategist at BNY Mellon in New York. "It's a little alarming to see a negative figure, but it's not unprecedented. But we like to look at the three-month moving average which isn't bad." The largest purchase of Treasuries came from Russia, buying $16 billion of the US long-term debt paper. Japan was the second largest buyer if Treasuries with purchases of $9.5 billion.
The biggest selling was from Belgium, offloading $15 billion in April, which was the first decline in eight months. Prior to April, Belgium's holding of US Treasuries had been increasing and the speculation was that Euroclear, a major Belgium-based clearinghouse, could be the buyer. Euroclear provides cross-border settlement and custodial facilities and it holds collateral such as Treasuries.
Ian Lyngen, senior government bond trader at CRT Capital in Stamford, Connecticut, said the decline in Belgium's net holdings of US Treasuries suggests stabilisation of the collateral-related flows. China's holdings of US Treasuries also declined during the month by $8.9 billion, but it remained the largest holder with $1.263 trillion in April, from $1.272 trillion in March.
Foreigners also sold US corporate bonds to the tune of $8.5 billion in April, from net inflows of $7.0 billion the previous month. Private accounts sold $8.2 billion in April, while official investors sold about $300 million. US equities showed a net inflow of $10.2 billion, from an outflow of $14.3 billion in March.