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UPDATE 1-Foreign purchases of U.S. Treasuries highest since 2011
April 15, 2014 / 2:25 PM / 4 years ago

UPDATE 1-Foreign purchases of U.S. Treasuries highest since 2011

* Overseas purchases of long-term assets highest since 2012

* Foreigners buy most Treasuries in a month since Sept 2011

* Japan raises U.S. bond holdings, China, Russia pare (Updates with details, quote, adds byline)

By Richard Leong

NEW YORK, April 15 (Reuters) - Foreign purchases of U.S. Treasuries jumped in February to their highest level in nearly 2-1/2 years on safe-haven demand due to the global economy and the tension between Russia and the West over Ukraine’s Crimea region, U.S. Treasury data showed on Tuesday.

Overseas investors and central banks bought $92.4 billion in Treasuries in February, the most they have bought since September 2011. This compared with a revised $584 million they sold in January.

Foreign central banks bought $16.6 billion in Treasuries, reversing the $16.7 billion in sales in January. This was the most U.S. government debt they have purchased in nine months.

Private overseas purchases of U.S. government debt totaled $76.1 billion, up from January’s $17.2 billion and the most since August 2011.

“We believe the strong inflows may have been the result of de-risking flows following the beginning of escalation in the Crimean region,” Gennadiy Goldberg, interest rates strategist with TD Securities, wrote in a research note.

In addition to the Crimean crisis, some investors socked money into Treasuries on worries about China and emerging economies, while disappointing data in the United States due partly on tough winter weather also spurred safe-haven bids for U.S. bonds. Despite those concerns, global stock prices managed to hit a six-year peak in February.

Benchmark 10-year Treasuries yield hit 2.57 percent in early February and ended the month little changed at 2.63 percent.

Overall, foreign investors bought $167.7 billion in U.S. bonds and stocks in February, from revised inflows of $87 billion in January and the highest since October.

With the exception of Treasuries, they were modest net sellers of corporate bonds and equities that month.

Among Uncle Sam’s major creditors, China trimmed their holdings of Treasuries in February to $1.273 trillion from $1.276 trillion in January.

Japan, the second biggest Treasuries holder behind China, raised its holdings to $1.211 trillion from $1.201 trillion.

Meanwhile, Russia reduced its ownership of Treasuries for a fourth straight month to $126.2 billion in February from $131.8 billion in January.

In March, Federal Reserve data showed a record $104.5 billion weekly decline in its custody of Treasuries for foreign central banks. Speculation had centered on whether Russia sold and/or transferred its U.S. government debt holdings from the Fed ahead of possible sanctions from the West due to its role in the Crimea crisis. The drop in custody holdings was following by increases in subsequent weeks.

The February data offered no definitive answer.

Excluding short-dated assets such as T-bills, foreign appetite for long-term U.S. assets staged a comeback in February to its strongest level in over two years, following three straight months of net sales.

Foreigners bought $76.5 billion in long-term U.S. assets, compared with the revised $2.1 billion they sold in January. Their February purchase was the highest since the $95.0 billion they bought in January 2012, according to Treasury data. (Reporting by Richard Leong; Editing by Chizu Nomiyama and Jonathan Oatis)

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