Chart of the day: Net foreign buying of long-term US securities, and 10-year Treasury rates

Idea to look at foreign selling of US Treasuries from Brad Setser- https://twitter.com/Brad_Setser/status/1262402854666612737.

March 2020 saw $300 billion net sales of US Treasury bonds and notes by foreign investors (heavily from emerging market central banks, as Setser points out). The selling was all in Treasuries, not agency securities or corporate bonds.

The point with adding the 10-year Treasury note interest rate series (on right axis) is to show that despite this unprecedented level of selling, Fed purchases more than made up for it to push interest rates down.

There might be other factors, such as an increase in pension funds' bond holdings, but I think the fact that the New York Fed's Trading Desk was purchasing more than $75 billion of Treasury securities per day in late March explains the movement.

Note

• Left axis in billions of dollars.
• Historical data from the Treasury International Capital System (TIC) https://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticsec.aspx. Country-level breakdown of recent months https://ticdata.treasury.gov/Publish/snetus.txt.
• 10-year Treasury rate data from FRED (adjusted to monthly frequency).