J.P.Morgan Weigh In On June's TIC Flow Data

J.P.Morgan note that June's TIC flow data, released Monday, showed "foreign investors purchased $10.9bn long-term Treasuries over the month, with $19.2bn of sales by official investors more than offset by $29.4bn of buying from private investors. Additionally, foreign holdings of T-bills declined for the fourth successive month, dropping $17.9bn in June to $278.2bn, and have now declined $82.2bn YTD. As we have stated in recent months, we believe foreign investors have let their T-bill holdings mature to extend into higher yielding alternatives, reflecting relatively elastic demand as the stock of outstanding T-bills has dropped this year."

• "Turning to the regional breakdown, the bulk of the buying emanated from the Cayman Islands in June, though this buying only reversed a small portion of the selling that occurred in H121. Again, given many hedge funds are domiciled in the Cayman Islands, this could indicate there was some short covering that occurred in June. Meanwhile, both Japan and China were net sellers. Japan sold $40.6bn in long-term Treasuries in H121."