J.P.Morgan Summarise The Latest TIC Flow Data

J.P.Morgan flagged that Thursday’s TIC data for October showed “foreign investors purchased $61.9bn long-term Treasuries over the month, a strong month of buying but down substantially from August’s record highs.”

• “Private institutions added $85.9bn Treasuries, slower than the pace observed over the prior two months, while official institutions shed $23.9bn, the ninth consecutive month of selling.”
• “Geographically, demand was almost entirely driven by the UK, which bought $47.2bn, and the Cayman Islands, which purchased $41.8bn. Together, these two regions explain around 85% of the net purchases during the month. It is well known that a significant share of hedge funds are domiciled in the Cayman Islands, suggesting that demand likely emanated from levered accounts, while it is more difficult to glean the original source of demand from the UK flow.”
• “Away from these two regions, China bought $7.2bn in October, the largest monthly net purchase since August. Moreover, our Chinese colleagues note that a fall in the US dollar index contributed to a rise in FX reserves in November. Meanwhile, Japanese investors sold $14.5bn in October, following $35.5bn of shedding in September. MoF data shows banks and insurers were strong net sellers throughout this fall, accelerating into November.”