Net foreign inflows into Treasuries rose for a third straight month in January in the amount of $74.36 billion, data from the U.S. Treasury department showed on Tuesday. Private overseas investors bought $62.22 billion in Treasuries and foreign official institutions bought $12.29 billion in January, according to Treasury International Capital (TIC) data.
Foreigners have bought Treasuries in eight of the last 12 months, including a record net monthly purchase of $118 billion in March 2021. Overall, the data showed a net TIC inflow of $294.2 billion. Of this, net foreign private inflows were $270.8 billion, and net foreign official inflows were $23.4 billion.
But total foreign holdings actually fell, as yields rose. U.S. benchmark 10-year Treasury yields peaked at 1.9020% in January and ended the month at 1.7838%, up about 27 basis points from the end of December.
The yield on the two-year note rose to 1.1846% in January from 0.7341% as markets anticipated a Federal Reserve interest rate hike to slow price rises and stave off hotter inflation.
The Fed is expected to raise its policy rate on Wednesday by 0.25%, the first hike since 2018, and announce it had ended pandemic-era bond purchases, with an aim to start letting its massive balance sheet shrink. Several more rate hikes are expected this year and next.
