J.P.Morgan On TIC Flow Data

J.P.Morgan note that "this afternoon the Treasury released its monthly TIC data for August: foreign investors purchased $30.7bn long-term Treasuries over the month, tripling the demand observed in July. The details show that the foreign private community was active, purchasing $51.7bn long-term Treasuries, the most since March, while foreign official investors shed $20.9bn over the month. Additionally, after declining over the prior four months, foreign official holdings of T-bills declined by $18.2bn, as the stock of outstanding T-bills dropped a further $104bn over August, and official holdings of T-bills have dropped $92.8bn YtD."

"Turning to the regional breakdown, the bulk of the buying originated from the UK and Japan. Unsurprisingly, and after robust short covering demand earlier in the summer, Cayman Islands data suggest that hedge funds were not as active in August, which was when yields first started rising from 1.22% at the end of July to 1.31% at the end of August. Japan saw the most purchases in more than a year, presumably as private investors took advantage of the modest rise in yields to add duration. As per usual, the UK's data is the hardest to read as the transactions bias can skew the data for countries with major financial centers, so it is likely that a significant share of purchases by the UK originated from other countries."