Thursday, August 11, 2011

Foreign Holdings of Federal Government Debt

There was a particularly weak 30 year Treasury auction today, which helped send interest rates higher.  Notably the indirect bid, which is typically taken as an indication of foreign interest in a treasury auction, was only 12.2%.  This number is normally in the 30%+ range.  While individual treasury auctions are generally pretty noisy, treasury bears seized the opportunity to opine on the possibility of foreign boycott.

For context, below is a chart showing the percentage of publicly traded US Treasury debt held by foreign investors.  There has been a steady, slow downtrend since 4Q08, but compared to the increase over the last 4 decades, the decrease is just a blip.  Treasury issuance has exploded since 4Q08, so foreigners are still purchasing debt in huge amounts--just at a smaller share of the new issuance than they were.

Source: US Department of Treasury

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