Yes, the US dollar may be a “safe haven” for now. And perhaps everyone wants to “park” their money in T-Bills. But it seems like nobody actually wants to leave their money in dollars for any length of time. At least not foreign investors.
Brad Setser runs through the latest data
The rolling 3m sum bounces around a bit, but foreign demand for long-term Treasuries in November, December and January was as subdued as it has been for a long-time. Among other things, that fall in foreign demand for long-term Treasuries after October suggests — at least
to me — that the big Treasury rally late last year (and subsequent sell-off this year) doesn’t seem to have been driven by external flows. Foreigners weren’t big buyers of long-term Treasuries back when 10 year Treasury yields fell to around 2%.
There also is at least a passing resemblance between a chart of foreign demand for US corporate bonds and foreign demand for Treasuries. Read the whole thing >
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