JPM analysts Jay Barry and Jason...>

US TSYS/RESEARCH: JPM analysts Jay Barry and Jason Hunter added Fed Fincl

Accounts Z.1 report on quarterly net purchases of Treasuries shows 3 trends:

"first, that foreign demand has rebounded sharply, as foreigners bought $187bn

in Treasuries in 3Q17 following a similar pace in 2Q17. The data do not directly

line up, but the monthly TIC data indicate that the bulk of this year's foreign

demand has come from private investors." 

- But they "expect foreign private demand to slow in 2018, as Treasuries now

appear less attractive to these investors, after adjusting for the cost of a

rolling FX hedge, and declining demand at the long end could reflect reduced

private interest for Treasuries. Looking ahead, we expect foreign exchange

reserves to grow over the coming year, and we project foreign official demand to

increase."