MNI DATA ANALYSIS:Frgn Invstrs Raise Cdn Bond Exposure in July>

By Yali N'Diaye

     OTTAWA (MNI) - Canada's international transactions in securities 

focused on the bond market in July, with foreign investors raising their 

portfolios' exposure to Canadian bonds by C$11.1 billion, while Canadian 

investment in foreign bonds increased by a record C$12.5 billion, data 

from Statistics Canada showed Monday. 

     The Bank of Canada raised its overnight rate target by 25 basis 

points to 1.50% on July 11, and short-term rates increased 15 basis 

points, while they rose 5 basis points in the U.S. At the long end of 

the curve, Canadian rates increased 22 basis points in July, while they 

declined slightly in the U.S. The loonie slightly appreciated against 

the U.S. dollar. 

     --FEDERAL GOVERNMENT BONDS IN FAVOR 

     Overall, foreign investment in Canadian bonds rose C$11.1 billion, 

the largest increase since November 2017. 

     Purchases were focused on federal government bonds, with investment 

up C$5.2 billion. 

     This was the first time that federal government bonds recorded an 

investment this year, with data year-to-date still showing a C$28.7 

billion divestment. 

     Investment in other government bonds rose C$1.5 billion. 

     --PRIVATE BONDS LOOSE MOMENTUM 

     While foreign investors bought C$3.8 billion of Canadian private 

corporate bonds, this was the lowest investment since January this year. 

Private corporate bonds (C$53.8 billion) still led foreign investment in 

Canadian bonds year-to-date. 

     Elsewhere, foreign investors reduced holdings of Canadian money 

market instruments (-C$0.4 billion), while they increased exposure to 

Canadian shares by C$2.0 billion. 

     Overall, foreign investment in Canadian securities rose C$12.7 

billion in July after a C$10.3 billion increase in June. 

     --CANADIANS FAVOR FOREIGN BONDS 

     Canadian investors also focused their acquisitions on bonds in 

July. 

     Total Canadian investment in foreign securities rose C$13.1 billion 

after an C$11.2 billion increase in June, led by a record C$13.9 billion 

investment in foreign debt. 

     Holdings of foreign bonds rose a record C$12.5 billion, with a 

focus on both U.S. Treasuries and non-US bonds. 

     Instead, there was a C$0.8 billion divestment in foreign equity and 

investment fund shares. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

[TOPICS: MACDS$,M$C$$$]