November 22, 2016 / 9:15 PM / 2 years ago

UPDATE 1-Foreign bids at U.S. Treasury supply weak after election

(Adds background to latest allotment data)
    NEW YORK, Nov 22 (Reuters) - Overseas demand for
longer-dated U.S. government debt supply was soft in early
November after Donald Trump's surprise presidential win sparked
a dramatic selloff in bond markets worldwide, Treasury
Department data released on Tuesday showed.
    Traders were dumping U.S. Treasuries, German Bunds, Japanese
government bonds and other fixed income securities on fears of
possible inflation and growing deficits if Trump followed
through on campaign promises of big tax cuts and federal
spending.
    Last Friday, the benchmark 10-year Treasury yield reached
2.36 percent, the highest in more than a year, before retreating
to 2.31 percent on Tuesday. 
    At the 10-year Treasury auction on Nov. 9, the day after
Trump's win, overseas investors, a major group of holders of
U.S. government debt, bought $3.018 billion of the supply
offered, down from $4.029 billion they purchased in October,
according to the Treasury's auction allotment data. 
    On Nov. 10 following the 10-year auction, foreign investors
bought $1.668 billion of 30-year bonds, down from $2.013 billion
in October.    
    On Nov. 8, overseas investors including foreign central
banks bought $2.915 billion of the $24 billion of 3-year
Treasury supply, compared with $4.368 billion they purchased the
previous month. This was the lowest amount since $2.875 billion
they bought in February 2015.
    The Treasury offered $24 billion in three-year notes, $23
billion in 10-year debt and $15 billion in 30-year bonds earlier
this month, which were parts of its November quarterly
refunding.
    The bond market rout coincided with a pullback in the
overseas appetite for U.S. government debt as global yields have
risen on speculation that major central banks would scale back
stimulus and some governments have been spending their dollar
reserves for domestic consumption and/or for stabilization of
their currencies versus the greenback, according to analysts.
    Foreigners sold a record $76.6 billion in Treasuries in
September, Treasury data released last week showed.
    China, the biggest U.S. creditor, reduced its holdings of
U.S. government securities to $1.157 trillion in September, the
lowest in four years. 

 (Reporting by Richard Leong; Editing by David Gregorio)
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