The TIC data shows strong demand for Treasuries even with the large supply increase. The net total of government bond purchases by foreigners was the highest on record since 1977. The private sector has increased purchases after avoiding the US markets at the turn of the year. There are a number ways to look at these numbers.
First, the rise in Treasuries earlier in the year has been enough to attract demand at the auction. The real return for Treasuries is attractive. Under these conditions, there is not a fear of a debt problem The dollar overhang issue of foreigners avoiding the reserve is not present in the June data.
Second, the level of risk aversion is still high. There are many attractive spread products but there still a strong interest for Treasury fixed income. The purchase of stocks was positive but the sale of US corporate bonds was positive. Foreign investors are still avoiding corporate debt risk. US investors are actually taking on more risk by purchasing more foreign stocks.
First, the rise in Treasuries earlier in the year has been enough to attract demand at the auction. The real return for Treasuries is attractive. Under these conditions, there is not a fear of a debt problem The dollar overhang issue of foreigners avoiding the reserve is not present in the June data.
Second, the level of risk aversion is still high. There are many attractive spread products but there still a strong interest for Treasury fixed income. The purchase of stocks was positive but the sale of US corporate bonds was positive. Foreign investors are still avoiding corporate debt risk. US investors are actually taking on more risk by purchasing more foreign stocks.
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