WASHINGTON—China was a net buyer of U.S. Treasurys for the first time in six months in March, boosting its position as the top foreign holder, the Treasury Department said.
Overall, foreigners were heavy net buyers of long-term U.S. financial assets in March, a time when investor concerns about Greece's ability to finance its debts pushed investors into Treasury debt.
China became a net buyer of Treasurys for the first time since last September, with its holdings increasing $17.7 billion to $895.2 billion, following net sales of $11.5 billion in February, according to the monthly Treasury International Capital report, known as TIC.
A Treasury selloff by China at the end of last year caused concern at first that the largest creditor nation to the U.S. was shifting out of U.S. assets. But major upward revisions to the December data in late February showed China hadn't actually lost its position as top Treasury holder to Japan, as initially thought.
Japan, the second-largest holder of Treasurys, also was a net buyer in March, lifting its portfolio holdings to $784.9 billion, from $768.5 billion in February.
Among all foreign investors, net purchases of U.S. Treasury notes and bonds totaled $108.5 billion in March, compared with net buying of $48.1 billion in February. More broadly, net purchases of long-term U.S. securities totaled $120.4 billion in March, following net buying of $34.8 billion the month before. February purchases were initially estimated at $34.1 billion.
Analysts warn against reading too much about individual countries' behavior into the volatile monthly flow data. The figures only measure Treasurys traded or held directly by entities from a given nation, and China increasingly has been using banks and other third parties in places like Hong Kong and London to trade Treasurys on its behalf. Those transactions would show up under TIC data for Hong Kong or Britain, not China.
Still, financial-market analysts consider the monthly data from the Treasury Department to be a significant but imprecise gauge of how easily the U.S. can finance its trade deficit. U.S. data released last week showed the trade gap widened to a 15-month high of $40.42 billion in March from $39.43 billion in February.
Investors have been shifting into dollar-denominated assets amid growing concerns about Greece's debt problems and its implications for the euro. Late in March, European leaders signaled they would rescue Greece together with the International Monetary Fund if such a step became necessary, but offered scant detail about how they would do it. Investors were big sellers of Greek bonds throughout March and beyond, and those same worries about heavy debt loads have spread to other highly indebted countries such as Portugal and Spain. "The Europeans have been panicking and buying the U.S.," said Sebastien Galy, currency strategist at BNP Paribas. "It's definitely a flight to quality."
Strong demand for U.S. Treasury auctions suggests inflows in upcoming TIC data will be "much bigger," he said.
The monthly report from the Treasury highlights cross-border acquisitions of securities with maturities of more than one year, including nonmarket transactions such as stock swaps and principal repayment on asset-backed securities.
The more closely watched figure excluding transactions that don't occur on an open market recorded a record amount of net buying, at $140.5 billion in long-term U.S. securities in March. That was up from $47.1 billion in purchases the month before. The report's most comprehensive category, "monthly net TIC flows," includes nonmarket flows, short-term securities and changes in banks' dollar holdings. This measure of net foreign capital inflow was $10.5 billion, compared with an inflow of $9.7 billion in February.
Among holders of long-term Treasurys, private foreign investors bought a net $79.3 billion in notes and bonds, after buying $47 billion the previous month.
Foreign official institutions such as central banks bought a net $28.2 billion of these Treasurys in March, compared with net purchases of $1.1 billion the month before.
Net foreign purchases of debt issued by U.S. government-sponsored agencies like Fannie Mae and Freddie Mac totaled $22 billion, compared with a $2.4 billion in purchases in February.
For U.S. equities, net foreign purchases totaled $11.2 billion, compared with purchases of $12.9 billion the previous month.
For corporate bonds, net foreign purchases were $16.0 billion, versus sales totaling $12.0 billion the previous month.
Yield on the 10-Year Increases to 3.470%
Trading in the U.S. Treasury market was jumpy Monday as investors took profits after last week's sharp rally, yet remained keen on low-risk U.S. government debt as concerns about the euro zone raged on.
The benchmark 10-year note was down 7/32 point, or $2.1875 per $1,000 face value, at 100 8/32. Its yield rose to 3.470% from 3.444% Friday, as yields move inversely to prices. The 30-year bond was down 13/32 point to yield 4.345%.
