JPM: Private Institutions Drove Tsy Sales In Oct

J.P.Morgan note that October TIC flow data showed that "foreign investors sold $20.1bn long-term Treasuries over the month. Private institutions drove the sale, shedding $26.2bn Treasuries over the month, while official institutions bought $6.0bn, close to the pace observed in September. From a geographic perspective, the UK once again recorded the most buying. As we have discussed many times in the past, the transactions bias can skew the data for countries with major financial centers: thus, it is likely that a significant share of purchases by the UK originated from other foreign countries but was transacted in London, and we cannot glean the original source of the demand. Meanwhile, investors in the Cayman Islands sold over $38.3bn long-term Treasuries, the largest monthly sale since April, and have now sold $238.9bn YTD. This flow likely indicates reduced demand for Treasuries among levered investors over a month when 10-year yields rose nearly 20bp. Looking ahead, we project that foreign official demand should be relatively muted in 2021, while private demand is likely to firm."