It’s a recent development, but it looks like more foreign buyers are sitting out recent Treasury auctions.
At Tuesday’s $30 billion auction of three-year notes, foreign buyers accounted for the smallest share of the offering since September.
At Wednesday’s $21 billon auction of 10-year notes, they bought the smallest share of the offering since November 2016.
At Thursday’s $13 billion auction of 30-year bonds, foreign investors bought the fourth lowest share since the end of 2016.
Holdings of Treasuries by foreign central banks hit an all-time record $3.1 trillion back in March. And then their hold gins in custody at the New York Federal Reserve fell for three straight weeks. The did rise in the week that ended on April 11.
So far any flagging in the appetite of foreign buyers for Treasuries hasn’t had much of an effect on Treasury yields. The yield on the benchmark 10-year note did rise four basis point to 2.82% on Thursday, but that’ near the average yield since the start of February.
On the other hand, it’s tough to discern any direction in Treasury yields when financial markets are spending their days bouncing between optimism and fear. Whenever the markets get rattled, the flow toward the safe haven of the Treasury market raises prices and depresses yields. At the moment that day at a time slosh is overwhelming any supply/demand trend as the U.S. Treasury looks to sell $1 trillion in bonds in 2018.