IC: Higher Yields Lead to Strong Purchases of U.S. Securities

The rise in Treasury yields that occurred in June caused foreigners to buy $100 billion worth of U.S. Treasury securities, casting doubt on the notion that foreign investors will shun U.S. bonds.

Foreign Investors Snapped up Treasury Securities

Foreigners purchased $124 billion worth of long-term U.S. securities in June, the largest amount since October 2007. Private investors accounted for $105 billion of the total.

Purchases of Treasury securities were very strong in June due, at least in part to the rise in yields that occurred early in the month. The recovery in risk sentiment also led to the fourth consecutive month of net purchases of U.S. equities.

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Renewed Interest for Foreign Securities

The rising appetite for risk was also manifested in the fourth consecutive month of net purchases of foreign securities by American investors. Net purchases of foreign stocks and bonds totaled $13 billion and $20 billion, respectively.

There is little evidence in recent TIC reports to suggest that foreigner investors are growing weary of buying U.S. securities.

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