Foreign Grip Loosens on Treasuries as U.S. Investors Buy..........Bloomberg

http://www.bloomberg.com/news/2014-03-23/foreign-grip-loosens-on-treasuries-as-u-s-buyers-bolster-demand.html

Overseas creditors such as China and Japan enabled the U.S. to spend its way out of the recession as they gobbled up 80 percent of the nation’s Treasuries. Now, their holdings are dropping toward the lowest level in a decade, while homegrown investors have picked up the slack.

Foreigners are slowing their purchases of U.S. government debt as central banks and reserve managers tried to diversify away from dollar-based assets on speculation the Fed’s policy of printing money by buying bonds would debase the greenback

With the Fed moving to end its own debt purchases this year, the willingness of U.S. investors to finance a greater share of America’s $12 trillion in marketable debt securities is now providing a crucial source of demand.

Becoming less beholden to foreign creditors also means the U.S. can limit the risk any reduction in their buying will trigger a sudden surge in borrowing costs for the government, companies and consumers.

Yields (USGG10YR) on 10-year Treasuries, a benchmark for everything from mortgages to car loans and corporate bonds, have confounded forecasters by falling this year as an economic slowdown in China and political crises from Thailand to Ukraine helped fuel demand for the safest assets among U.S. investors.

After reaching a 29-month high of 3.05 percent at the start of the year, yields on the benchmark 10-year note ended at 2.74 percent last week. That compares with an average of 4.7 percent in the past two decades and 5.84 percent for past 30 years. 

The yield was 2.77 percent as of 7:21 a.m. in New York.

Foreign Holdings

Of the $8.1 trillion in U.S. government notes and bonds not held by the Fed, overseas investors owned $5.4 trillion as of January, data from the Treasury department and the central bank compiled by Bloomberg show. The figures exclude Treasury bills, which have maturities of one year or less.

The total is equal to about 67 percent, approaching the lowest level since the government began releasing the data in 2000. Overseas investors scaled back their pace of U.S. debt purchases last year, increasing their holdings by $228.2 billion, or 4.1 percent, the least in seven years.

China, the largest foreign creditor with $1.27 trillion of Treasuries as of January, has slowed its accumulation to about 3.1 percent annually since 2010. That compares with an average yearly increase of 34 percent in the 10 years before.

me - Japan like situation; lost decade; lower yields for many years ???