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By Gertrude Chavez-Dreyfuss
NEW YORK, March 15 (Reuters) - Foreign holdings of U.S.
Treasuries rose for a third straight month in January, data from
the U.S. Treasury Department showed on Wednesday, with yields
continuing their decline as investors reckoned that the Federal
Reserve was nearing the end of its tightening cycle.
U.S. economic data during the month showed signs of slowing
down as the Fed's past rate increases started to take their toll
on the economy.
Offshore holdings rose to $7.402 trillion in January from
$7.318 trillion the previous month. But compared with a year
earlier, Treasuries held by foreigners fell 3.3% in January.
The benchmark 10-year Treasury yield started January at
3.792% , falling to 3.529% by the end of the month.
U.S. 10-year yields hit a 15-month high of 4.338% in October
last year.
The decline in U.S. Treasury yields, which move inversely
with prices, is a sign investors have started to dip their toes
back into to the debt market. The inflow into bonds also came
after Treasuries notched the worst year in their history in 2022
following the Fed's most aggressive monetary policy tightening
since the 1980s.
Japan remains the largest non-U.S. holder of Treasuries with
$1.104 trillion in January. That was up from $1.076 trillion in
December. Japan though had been selling Treasuries for most of
last year to help defend a struggling yen.
Data also showed holdings of China, the second biggest
non-U.S. holder of Treasuries, fell once again to $859.4
billion, down from $867.1 billion in December. China's holdings
fell for a sixth straight month and were the lowest since May
2010 when it had $843.7 billion.
Much like Japan last year, the world's second largest
economy has been unloading Treasuries to help boost its slumping
currency, the yuan, against a robust dollar, which had benefited
from a string of big interest rate hikes by the Fed.
On a transaction basis, Treasuries posted foreign inflows of
$50.9 billion in January, from $19.98 billion in December.
Treasuries have seen inflows from foreign investors for nine
straight months.
Data also showed outflows of $27.52 billion in U.S. stocks
in January, compared with inflows of $54.98 billion the previous
months.
Foreigners also bought $2.42 billion in U.S. corporate
bonds, compared with $14.38 billion in December. The sector has
seen foreign inflows for 13 straight months.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Mark Porter
and Marguerita Choy)
Messaging: rm://gertrude.chavez.reuters.com@reuters.net))
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