Sep 18, 2019

Foreign buyers loaded up on U.S. stocks and sold Treasury bonds in July

Photo: Alstair Pike/AFP/Getty Images

Major foreign investors added to their holdings of U.S. stocks but slightly cut their Treasury bonds in July, data from the Treasury department released Tuesday shows.

Of note: China reduced its share in July and foreign holders overall cut their Treasury holdings to $6.63 trillion. China has been gradually paring down its holdings for some time, but most analysts don't see the reduction as part of a strategy to dump Treasuries as a trade war weapon.

  • However, China has been looking to reduce its dependence on the U.S. dollar and other financial instruments.

Worth watching: Japan increased its holdings of U.S. Treasuries to $1.13 trillion, a 3-year high, maintaining its spot as the largest single foreign holder of U.S. government debt for a second straight month.

The big picture: Data also showed that foreigners purchased a net $24.26 billion in U.S. stocks, adding to their American equity exposure for a second straight month. Prior to June, foreign investors had sold U.S. stocks for 13 months in a row.

Go deeper: The shrinking U.S. yield premium

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China seems unfazed by U.S. threats to limit investor access

Illustration: Lazaro Gamio/Axios

China appears unbothered by news the Trump administration is considering limiting U.S. investors’ portfolio flows into the country.

What's happening: China has been opening its capital markets to foreign investment, and over the past 8 years money flowing into China's stocks and bonds has grown 6-fold to nearly $1.3 trillion, per Wind Information data shared by Seafarer Funds.

Go deeperArrowSep 30, 2019

September's market reversal on stocks and Treasury bonds

Data: Investing.com; Chart: Axios Visuals

Stocks have steadily risen over the course of September, with the S&P edging up by around 3% month to date, while safe-haven U.S. Treasury prices have fallen, pushing yields higher, in a sign of investors' increasing appetite for risk.

Why it matters: The pickup in stock buying so far this month has been a major reversal of the trend seen in markets for most of the year. Capital flows had largely been going into bonds and money market funds and out of stocks.

Go deeperArrowSep 25, 2019

The stock market is overreacting

Stocks took a nosedive for the 2nd consecutive day on Wednesday and the Dow and S&P fell for the 4th time in 5 sessions. But the U.S. Treasury market experienced a far smaller move, as it has been factoring in manufacturing weakness and slowing job growth for months.

Why it matters: The bond market's limited movement in the face of historically weak manufacturing and deteriorating employment data suggests the worst may be over, analysts say.

Go deeperArrowOct 3, 2019