February 15, 2017 / 10:11 PM / 3 years ago

UPDATE 1-Foreigners sell U.S. Treasuries for 9th month in Dec -Treasury data

(New throughout, adds details and comment from analyst, adds byline)

By Gertrude Chavez-Dreyfuss

NEW YORK, Feb 15 (Reuters) - Foreign investors in December sold safe-haven U.S. Treasuries for the ninth straight month, data from the U.S. Treasury department showed on Wednesday, and some analysts said the latest sales may have reflected increased risk appetite after the November election of Donald Trump as U.S. president.

Data showed foreigners sold $21.9 billion in U.S. Treasuries, after outflows of $205 million in November.

For the month, private investors sold $40.5 billion in Treasuries, while foreign official institutions, which include central banks, bought $18.6 billion. Foreign official accounts bought Treasuries in December, after selling them for 12 consecutive months.

“This could have been post-elections, with the very large yield move that we saw in December,” said Gennadiy Goldberg, interest rates strategist at TD Securities in New York.

“Foreign official accounts do tend to like higher yields. This gives them more bang for their portfolios,” he added.

Yields on U.S. benchmark 10-year Treasury notes at the beginning of December were 2.44 percent, hitting a high of 2.64 percent and ending the month at 2.43 percent. Late on Wednesday, U.S. 10-year yields were at 2.49 percent.

From the U.S. presidential election until mid-December, 10-year yields had risen 93 basis points.

China’s holdings of U.S. Treasuries, meanwhile, increased in December to $1.058 trillion, from $1.049 trillion in November, making it the second largest non-U.S. holder of Treasuries. Prior to December, China sold Treasuries for six consecutive months as its central bank dipped into its reserves to prop up a weakening yuan.

“What might have happened was that China may have sold too much Treasuries in the prior months and wound up with too much of a cash cushion and decided to re-invest back into Treasuries,” said TD’s Goldberg.

For a third straight month, Japan remained the biggest non-U.S. holder of Treasuries, with $1.09 trillion.

Total central bank holdings of U.S. Treasuries as of December were $6 trillion, up from $5.9 trillion in November.

The data also showed offshore investors sold $12.9 billion in long-term U.S assets in December after buying $34.4 billion the previous month. Including shorter-dated securities, foreigners sold $42.8 billion in U.S. assets after buying $30.2 billion in November.

Foreigners also sold U.S. stocks in December to the tune of $9.9 billion, after selling $5.8 billion in November. Offshore investors have sold U.S. equities for four straight months. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Chris Reese and David Gregorio)

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