May 7, 2018 / 8:30 PM / in 13 days

Foreigners buy fewer U.S. Treasuries at auctions in late April

NEW YORK (Reuters) - Foreign investors and central banks purchased fewer U.S. shorter Treasuries in late April, marking a second straight series of auctions where they showed less appetite for U.S. government debt, Treasury Department data released on Monday showed.

Nearly two weeks ago, the Treasury auctioned $32 billion of two-year notes, $35 billion in five-year debt and $29 billion of seven-year notes.

Analysts and traders have increased their attention on foreign holdings of Treasuries as speculation has grown on whether China and other nations may consider reducing their U.S. debt holdings as a way to retaliate against tariffs and other trade restrictions imposed by the Trump administration.

There have also been concerns about the willingness of overseas investors to own Treasuries as the government has ramped up its borrowing to meet a widening budget gap stemming from the dramatic tax overhaul last December and a two-year spending agreement inked in February.

Foreign investors, a major group of holders of U.S. government debt, bought $3.092 billion of the latest two-year note supply, which was their lowest amount since November.

This compared with $3.941 billion in two-year supply they purchased in March, according to the Treasury Department’s auction allotment data.

They bought $3.341 billion of the latest five-year supply, which was the lowest level since September and down from $5.059 billion they purchased the previous month.

Overseas investors purchased the fewest seven-year Treasuries at auction since October at $3.924 billion. This was less than $4.609 billion they bought at the seven-year auction in March.

While foreigners have pulled back their Treasuries purchases, domestic fund managers stepped up their buying of these Treasury maturities to their highest levels since September.

In late April, investment managers bought $13.930 billion of two-year notes, $19.569 billion in 5-year notes and $18.074 billion in 7-year debt, Treasury data showed.

Reporting by Richard Leong

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