Foreign Buyers Desert US Treasury Bond Market As Supply Increases
Portfolio Pulse from Neil Dennis
Foreign investors were net sellers of U.S. government debt in September, marking the first time in over two years. The Federal Reserve is selling $60 billion a month of its Treasury holdings, while the Treasury has issued $2 trillion in new debt this year. Despite falling foreign demand, Treasury ETFs like iShares iBonds Dec 2028 Term Treasury ETF (IBTI) and iShares iBonds Dec 2032 Term Treasury ETF (IBTM) have risen recently. The decline in foreign buying, particularly from China and Japan, has been offset by increased spending on Treasuries from the Middle East and Latin America.
November 17, 2023 | 8:54 pm
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POSITIVE IMPACT
iShares iBonds Dec 2028 Term Treasury ETF (IBTI) has increased by 2% since its recent low on October 19, despite a general decline in foreign demand for U.S. Treasuries.
The rise in IBTI despite the decrease in foreign demand suggests that domestic buyers are filling the gap, potentially leading to a short-term positive impact on the ETF's price.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
iShares iBonds Dec 2032 Term Treasury ETF (IBTM) has increased by 4% since its recent low on October 19, in line with the trend seen in other Treasury ETFs.
The increase in IBTM's price could be attributed to the higher yields attracting domestic investors, suggesting a positive short-term outlook for the ETF.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80