J.P.Morgan: Private Investors Drove Offshore Purchases In July

J.P.Morgan note that "this afternoon Treasury released its monthly TIC data for July: foreign investors purchased $10.2bn long-term Treasuries over the month, roughly in line with last month's pace, although the details showed a moderation in demand from the foreign private community to $10.6bn, while net purchases by foreign official investors were close to flat. Additionally, after declining over the prior four months, foreign holdings of T-bills rose by $8.2bn, even as the stock of outstanding T-bills dropped further over the month. Despite the modest increase, foreign holdings of T-bills remain $74.0bn lower YTD. Turning to the regional breakdown, the bulk of the buying emanated from the Cayman Islands once again, following the significant selling that occurred from this region in H121. Given many hedge funds are domiciled in the Cayman Islands, we expect short covering flows continued in July. Meanwhile, Japan and the UK were the largest sellers, shedding $11.5bn and $20.4bn, respectively. The transactions bias can skew the data for countries with major financial centers, so it is likely that a significant share of sales by the UK originated from other countries."