The Proportion of US government bonds held by foreign investors continued to decline in September, and China held the lowest amount since February 2017, according to Bloomberg. Japan, the largest foreign holder, also dumped holdings for the second consecutive month.
However, lhe purchases of Federal Reserve bonds have offset the drop in external demand for Treasury bonds. “This year, the Federal Reserve has been the largest national player, raising about $ 2 trillion since March as part of its efforts to counter the economic cost of the Covid-19 pandemic,” Bloomberg noted.
As such, 10-year yield has dropped more than 100 basis points this year. The benchmark yield is currently at 0.85%, having hit a record low of 0.36% during the coronavirus-induced financial market crash in March.
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