Foreign investors continue UST buying💰
While common wisdom would have blamed foreign selling of USTs for the current rise in yields, that would once again be a wrong understanding, as foreign investors have still been net buyers of treasuries in 2023 to the tune of $275bln YTD. The elephant in the room is really the Federal Reserve as they continue with their QT program, being a net 'seller' of $720bln of UST as they allow their balance sheet to run-off. US commercial banks are the only other major seller with $170bln of net selling as they de-risk their duration holdings on the back of the massive move higher in rates. On the other hand, mutual funds and money-market funds have collectively funded the net-divestitures from the Fed as individual savers have collectively purchased $875bln to take advantage of the higher cash rates. In fact, GS estimates that 73% of the year's UST buying has been made up by US households. Who says Americans don't do any saving at all?
#FederalReserve #CommercialBanks #MutualFunds #USHouseholds #macro