By Saqib Iqbal Ahmed
NEW YORK (Reuters) -Foreign holdings of Treasuries rose for a fourth straight month in July, hitting a record high, data from the Treasury Department showed on Thursday.
Major foreign holders of Treasuries held $7.54 trillion, the highest on record, according to Refinitiv Datastream. In June, foreign holdings of Treasuries stood at $7.50 trillion.
“One of the big drivers is just low interest rates across the world. That’s certainly driving a lot more investors to U.S. Treasuries despite their low rates,” said Gennadiy Goldberg, senior U.S. rates strategist, at TD Securities in New York.
Although U.S. Treasury yields are low, they are higher than government bond yields in many other major countries, boosting their attractiveness to foreign investors.
“Looking back, we saw a fairly significant decline in interest rates in July and the data suggest it was driven at least partly by the buying from foreign investors,” Goldberg said.
U.S. benchmark 10-year Treasury yields started July with a yield of 1.4680%, falling about 24 basis points to 1.2256% by the end of that month.
Overall, net foreign acquisitions of U.S. long-term and short-term securities, including banking flows, showed a net inflow of $126 billion in July, from a revised net inflow of $32 billion in June.
On a transaction basis, foreigners bought $10.20 billion in Treasuries in July, the second straight month of inflows. U.S. Treasury outflows in May were the largest since April 2020.
Japan remained the largest non-U.S. net holder of Treasuries at $1.31 trillion in July, up from $1.28 trillion in June.
“It’s certainly a very large month when you put it into a historical context,” Goldberg said.
China’s holdings rose to $1.07 trillion, the first increase in 5 months.
Foreign investors, meanwhile, sold $34.31 billion in U.S. equities in July, the most for any month in at least 4 years, after being net buyers for 10 of the prior 12 months.
(Reporting by Saqib Iqbal Ahmed; editing by Jonathan Oatis and Richard Pullin)
