Thread by @Trinhnomics

Good morning 🦋- let's chase the $1st & cover central bank meetings after. Foreign holders of @USTreasury declined in April by 40bn to 6.4trn USD.

Who sold: Almost everyone, including China & Japan.
What did they sell? Shorter end, namely treasury bills (<1yr) & bought bonds👇🏻

@USTreasury Notice that this is stock data. Flow data shows net purchases for April (+36.4bn) & the selling of China is 1.9bn. Let's look at the curve for April & one month later & then the curve now.

@USTreasury UST curves shows that yields dropped from 1 April to end of April & dropped further to now. Meaning, more people are BUYING UST. Who are these buyers? According to @USTreasury , official institutions sold so private sector likely bought. US private sector likely up too 🤗

@USTreasury The drop of foreign ownership of UST, esp by foreign official institutions, means that they either took profit or used UST to defend their FX. Either way, YIELDS CONTINUED TO DROP & that means MORE PRIVATE BUYERS (mostly US 🇺🇸). But that means they sell other assets to buy UST 😬

@USTreasury Now let's talk about central banks. RBA minutes show that more cuts are coming, "further easing more likely than not in the period ahead." They are being clear here about ✂️✂️. Okay, what about the Fed, BSP (I think I'm followed by the BSP😬), BI, BOJ, & Taiwan CBC??

Let's look!

@USTreasury Before we talk about what'll likely happen (these calls are easy now in June & will get harder later), let's look at what markets are pricing in:
USA 🇺🇸 - lots of cuts are priced in in 1yr so either the world crashes or that's too many
Asia - lots for Australia & Korea'll cut too

@USTreasury The Philippines:
*GDP slowed to 5.6%YoY & details not good &so far the only good data is the bounce of credit growth
*CPI up a little to 3.2%YoY but still manageable & on target
*Exports weak
*BSP cut by 25bps already + 200bps RRR tiered through July 26
*Tomorrow: Will cut 25bps

@USTreasury Indonesia 🇮🇩:
*Growth weak, as shown by contracting exports & imports 👇🏻
*CPI rising marginally but still low at 3.3%YoY
*Jokowi win means push to do infrastructure investment
*Needs to push funding costs 📉
*Rates to be slashed in July but chance of June cut 📈 given dovish tone

@USTreasury Fed🇺🇸:
*Growth softening but still not weak enough for a cut yet as retail sales decent, CPI slowing to 1.8% but not collapsing, ISM manu 📉 but services 📈
*Fundamentals of US consumers better w/ pockets of weakness (household debt down a lot since GFC)
*Key is forward guidance.

@USTreasury 😮Lots of buying of @USTreasury since Europe opened & Draghi talking down the EUR w/ his 🕊️dovish words & ZEW investor expectations falling📉📉📉 & now USG10yr is, wait for it, 2.0475%

👇🏻👇🏻👇🏻Tons of buyers in June of high quality fixed income.