The US Treasury Department reported on Thursday that foreign investors purchased an estimated $103 billion in US long-term securities during April, according to its monthly Treasury International Capital (TIC) data. Concurrently, foreign holdings of US Treasury securities increased by $3.9 billion. This follows a significant drop in foreign Treasury holdings of over $138 billion in March.
Key Holder Movements
Among the largest foreign holders of US Treasuries, Japan increased its holdings by $18.3 billion in April, raising its total from $1.19 trillion in March to $1.21 trillion. The United Kingdom boosted its holdings by $10.6 billion, moving from $926.9 billion to $937.5 billion. China's holdings, however, decreased by $1.2 billion from $652.3 billion to $651.1 billion, marking a new low not seen since 2008.
Net Transaction Trends
On a net transaction basis, foreign investors sold $13.6 billion in short-term Treasury bills with maturities of one year or less. In contrast, they were net buyers of $50.5 billion in long-term Treasury notes and bonds.
Overall Holdings and Market Context
The increase in Treasury holdings brought the total foreign-held amount to $9.353 trillion. This figure is higher than the March level but remains below the historical peak of $9.49 trillion recorded in February. The report also noted that foreign investors' long-term Treasury holdings experienced an approximate $39 billion paper loss in April due to valuation changes.
This data release comes as the Federal Reserve continues its efforts to combat inflation and as the stock market rally, fueled by artificial intelligence-related shares, persists. Market participants are closely monitoring overseas demand for US government debt.
In a related market development on Thursday, a new 5-year Treasury Inflation-Protected Securities (TIPS) auction saw robust demand. This strength partly reflects a recent rise in the inflation-adjusted "real yields" within the TIPS market over recent weeks.
Comprehensive Capital Flows
The Treasury Department stated that total net foreign purchases of US assets, representing TIC net inflows, amounted to $26.1 billion in April. This total comprised net outflows of $23.1 billion by foreign private investors and net inflows of $49.2 billion by foreign official institutions.
The department further added that foreign residents increased their holdings of US long-term securities by a net $206 billion during the month. Within this total, net purchases by foreign private investors were $164.4 billion, while net purchases by foreign official institutions reached $41.6 billion.
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