Despite all the talk that foreigners (China, Japan, et al.) will flee U.S. government bonds, the market remains stubbornly buoyant.
Last week we got the latest numbers on foreign buying of U.S. securities. And they once again looked strong.
In April, foreign buyers picked up a net $76 billion in Treasuries. The third-highest monthly total ever.
It's clear from the chart below foreign buying remains in an uptrend.
One of the important questions is: who's buying? Answering this, however, is growing more difficult.
We know that Japan picked up $13 billion in April. A significant chunk of the buying. The only other notable purchaser was the U.K., which bought a whopping $42 billion. Over 55% of total purchases.
But residents of many other nations bank through London. Likely accounting for some portion of the $42 billion. The exact nationality of these buyers remains a mystery (as with buying from other banking centers like the Caribbean).
But one thing is for certain. The big global players (China, Japan and Europe) are not selling out of U.S. bonds. In fact they appear to be upping their purchases. We'll see what the data for May brings next month.
By. Dave Forest of Notela Resources