The Treasury International Capital (TIC) flows for January are out today. As we suspected, foreign central banks have been net sellers over the past few months.
Looking at both private and official flows in China and Japan, the two most significant holders of Treasuries — China sold $16.7 billion in January and Japan was a small net buyer of $4.3 billion.
As the U.S. budget deficit increases in 2018 and the Treasury funding needs ramp up , it is essential that foreign central banks begin to show up again. It appears they did in the latest auctions.