J.P.Morgan Continue To Think Foreign Demand Will Be Muted Through H222

In the wake of Monday’s TIC flow data J.P.Morgan note that “foreign investors purchased $58.9bn long-term Treasuries over the month. Private institutions added $65.1bn Treasuries, less than half of the previous month’s record pace, while official institutions shed another $6.2bn, the fifth consecutive month of selling. Geographically, this demand was primarily driven by the UK, which bought $35.3bn, nearly matching the previous month’s pace. Additionally, the Euro Area purchased $19.3bn in U.S. Treasuries, the most in a single month since July 2016, with demand primarily coming from France and Germany. Meanwhile, the Cayman Islands, which were heavy buyers of Treasuries in May, actually sold $5.1bn. Overall, despite the strength of foreign demand through June, we think foreign demand should be more muted over the remainder of the year, and should keep bearish pressure on Treasuries, particularly in the intermediate sector.”