• 287 days Will The ECB Continue To Hike Rates?
  • 287 days Forbes: Aramco Remains Largest Company In The Middle East
  • 289 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 689 days Could Crypto Overtake Traditional Investment?
  • 694 days Americans Still Quitting Jobs At Record Pace
  • 696 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 699 days Is The Dollar Too Strong?
  • 699 days Big Tech Disappoints Investors on Earnings Calls
  • 700 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 702 days China Is Quietly Trying To Distance Itself From Russia
  • 702 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 706 days Crypto Investors Won Big In 2021
  • 706 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 707 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 709 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 710 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 713 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 714 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 714 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 716 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Meager Foreign Participation in Treasury Auctions

Today's auction of $21 bln in 3-year treasury notes drew 24% participation from foreign investors (indirect bidders), which was above February's 22% but lower than the 2003 and 2004 averages of 27% and 45%.

Last month's 2-year auction drew 24% participation -- the lowest since November 2004, while the 5-year auction drew 21% participation -- the lowest since the records began in February 2003.

  • Although the high yield element of the US treasuries does remain a point of attraction for foreign investors, it is not reflected in the primary market auctions, leading us to believe that private investors (foreign central banks and offshore hedge) are mostly snapping them in the secondary market.

  • But the increasingly meager foreign participation in US treasury auctions could reflect a general backtracking in foreign demand for US paper in light of the combination of a looming end to the Fed rate hikes and the emergence of the dollar's external imbalances, which is not expected to acquiesce any time soon with oil prices on the rise.

  • The concern on US fixed income paper becomes highlighted when discouraged foreign participation in treasury auctions begins to: 1) raise the cost of government borrowing and; 2) further impacts the housing market as it drives up long term yields along with rising inflationary expectations.

 

Back to homepage

Leave a comment

Leave a comment