Global investors are silently promoting the Rally of the US market

Foreign buyers I: loading the treasures and actions of the United States. The phrase “I have always depended on the kindness of strangers” is a famous line of Tennessee Williams,

A tram called Desire. Is pronounced by the character Blanche Dubois In the final scene as a doctor and nurse they take her away. The line is often interpreted in several ways, even as an expression of Blanche’s ingenuity, its dependence on fantasy and illusion, and its desperate need for acceptance and validation.

Similarly, Uncle Sam has been based more and more on the kindness of strangers, that is, foreign investors, to buy treasure bonds in the United States, helping to finance the rapid debt of the Federal Government of the United States. In recent years, the Doomsayers, such as Ray Dalio, have warned that we can no longer count on them. A debt crisis is increasingly likely, they warn.

That would make bond yields shoot in the United States. They would also collapse in this scenario. The Dollar Bears have recently noticed that world capital investors are rebuilding their portfolios of US shares and other important capital markets worldwide, particularly those in Europe. This has depressed the dollar currency value, especially in relation to the euro.

Detractors may be right eventually, but May Treasury International Capital System (ICTs) The data published last Thursday by the United States Treasury show that foreigners are still very friendly willing to buy US values. In fact, they bought these values at a record rate during the 12 months until May! This helps to explain why the bonus performance has remained relatively subject throughout the year, around our target range of 4.25% to 4.75% (Fig. 1 Below).

That is consistent with our opinion that the performance of the bonds has been normalized in recent years when trade in a range like that of the years prior to the great financial crisis.

The record entry into US actions also partially explains the rebound of 26.4% unprecedented in the minimum correction of April 8 (Fig. 2 Below). More difficult to explain is the weakness in the (DXY) so far this year in the face of massive net foreign entries in US values (Fig. 3).

The latest treasury data confirms our position that this year’s decrease in the dollar is a correction (which could have ended), and not the beginning of a long -term decrease in the foreign exchange value of the Back Greenback.

Therefore, it comforts us the data that confirms that they are the Bears in the prospects of a mass sale in American bonds, US actions and the US dollar that could be delusional, not in the US. UU. Our faith in the kindness of strangers has been validated by the latest treasury data.

Now, let’s take a close look at that data, confirming that “foreigners like us at this time” paraphrasing the acceptance of Sally Field’s Oscar speech:

(1) Total tickets. The US net capital tickets. UU., Including private and official foreign accounts, increased to a record of $ 1.76 billion during the 12 months until May (Fig. 4 Next). In fact, that is quite impressive, since Trump’s tariff agitation (TTT) was wide and wrong guilty that foreigners invest in the United States in recent months.

(2) Official entries total private. The net capital tickets of the United States attributable to official foreign accounts were only $ 33.5 billion in the last 12 months until May (Fig. 5 Below). But those attributable to foreign private investors rose to a record of $ 1.73 billion.

(3) Total entries in bonds and actions of USA. Net foreign entries in US bonds. (Including treasure, agency and corporate bonds) remained high at $ 941 billion in the last 12 months until May (Fig. 6 Below). Even more impressive is that tickets in US shares increased to a record of $ 597 billion during the same period!

Only during May, the net entrance to the US values. It was $ 318.5 billion, with $ 146 billion in US Treasury notes and bonds. UU. And $ 114 billion in shares of the United States. Uu. After Trump moderated their commercial warfare posture during April, foreign investors returned to the United States in size during May.

(4) Tickets in links. During the last 12 months until May, net purchases abroad privately of treasure notes and bonds were $ 541 billion, the agency’s bonds were $ 133 billion and national corporate bonds were $ 267 billion (Fig. 7). Official foreign accounts showed a net exit of $ 73 billion during this period (Fig. 8 and Fig. 9). These accounts were also net vendors of agency bonds ($ 55 billion) and shares ($ 35 billion).

(5) Inputs in the Treasury Invoices. The net tickets in the Treasury invoices in the last 12 months totaled $ 336 billion with official accounts that bought $ 143 billion and the private ones of $ 193 billion (Fig. 10 Below). The total is the most since mid -2020, just after the pandemic blockages were built, which suggests that TTT caused so much anguish throughout the world as the great crisis of the virus did.

Foreign buyers II: Not all bond guards speak English. Treasury data show that the largest group of possible bond guards are foreign private investors and foreign official accounts. That is because they possess most of the United States Treasury bonds. Consider the following:

(1) Foreign treasure bond holdings. Collectively, foreigners (also known as strangers) had a record of $ 9.0 billion treasure bonds of the United States during May, up to $ 869 billion a year ago (Fig. 11 Next). Foreign official accounts had $ 3.9 billion, while private foreign accounts had $ 5.1 billion.

(2) Percent of American debt in the hands of foreigners. Therefore, foreigners had 32% of the $ 28.6 billion of the Total Treasury debt of the USA.Fig. 12 Below). That is below a 56% record during May 2008. During this same period, the percentage of official accounts (including central banks and sovereign wealth funds) fell from a record of 41% to 18%, while the percentage of private foreign accounts fell from 18% to 14%. The percentage of the United States Treasury debt in the hands of private foreigners exceeded that of foreign official accounts during July 2023, when both had 15%.

(3) The maturities of the Treasury in the hands of official foreigners. Interestingly, foreign official accounts mainly have treasure notes and bonds. During May, they had $ 3.5 billion in these maturities and only $ 0.4 billion in invoices (Fig. 13 Below). (Note that the notes include all treasures with original maturities from 2 to 10 years and the bonds are those issued with original maturities greater than 10 years, according to the Treasury).

The percentage of notes and bonds held by foreign official accounts has decreased from 54% during August 2008 to 18% (Fig. 14). Official accounts, such as central banks, are relatively lower characters in the history of bond guardians.

Foreign Buyers III: Quarterly Fed Data. The Fed uses the ICT data in its quarterly compilation of transactions and balances of the capital market:

(1) Main holders of treasure bonds during the first quarter. At the end of the first quarter of 201-2025, the “rest of the world” (row) had $ 9.0 billion in the treasure bonds marketed in the United States that represent 32% of the marketable debt of the United States (Fig. 15 and Fig. 16). Institutional investors represented 14%; The Fed represented 14%; Mutual funds in the money market had 10%; Households had 10%; And, the rented depositary institutions of the United States. UU. They had a 5% participation of the debt. All others represented the remaining 15%.

(2) Main holders of treasure bonds since 1952. During the 1950s and 1960s, banks had most of the treasure debt. But their participation has fallen from more than 44% during 1952 to 6% currently (Fig. 17 Below).

Collect sharing on the way has been the row. It was well below 10% during the 1950s and 1960s. It shot up to 28% at the end of 1978 after President Richard Nixon closed the gold window in August 1971. Indeed, that ended the gold standard and began the dollar standard.

The participation of the United States Treasury debt row reached its maximum point by 57% during the second quarter. It has fallen to 34% at the end of Q1-2025.

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