U.S. Treasuries surge to record high in June

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The foreign holdings of U.S. Treasuries in June have climbed since February 2020 to their highest, Treasury Department data showed on Monday in what analysts described as broad-based demand that helped drive yields lower for the month.

Major foreign companies held troasuries worth $7.202 trillion -- up from $7.135 trillion in May, before selling to US investors in August 2017. The foreign holding of reserves were the second largest on record in June. The month also saw about $67 billion in Treasury purchases, the largest annual increase in one year.

Some of the largest purchases to foreign Treasury holdings were in custodian countries such as Ireland, Cayman Islands, and Luxembourg, which tells me that buying was pretty broad-based, said Gennadiy Goldberg ( senior U.S. rates strategist) at TD Securities in New York.

This is consistent with the rally in the Treasuries during the month. You obviously had buying in May and June, but it looks like in June it would have the effect of driving rates lower, he added.

U.S. benchmark 10-year Treasury yields began June with a yield of 1.6062%, falling 14 basis points to 1.4680% by the end of that month.

Japan remains the largest non-U.S. holder of Treasury with holdings of $1.277 trillion in June, up from $1.266 trillion the previous month.

China's holdings, on the other hand, fell to $1.061 trillion in June, from $1.078 trillion in May. China's Juni holdings were the lowest since October 2020.

On transaction basis, the European Union sold $10.86 billion in Treasuries, after selling $93.36 billion in May, data showed. U.S. Treasury outflows in May were the largest since April 2020.

In March of this year, Treasuries were flooded with record inflows of $118.87 billion.

Data also showed U.S. corporate bonds had inflows for a sixth straight month with $13.835 billion in June, from $17.31 billion in May.

Foreign investors, meanwhile, sold $25.2 billion in U.S. equity in June after buying $2.4 billion in May of the same time.

Overall, the net acquisitions of U.S. long term and short-term securities, including banking flows, were announced by a net inflow of $31.5 billion in June from $98.2 billion in May.