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TUESDAY’S 10-YEAR TREASURY AUCTION IN FOCUS FOR FOREIGN DEMAND

A sharp rally in the Taiwanese dollar against the U.S. dollar is reigniting concerns that foreign investors will pile out of U.S. investments as President Donald Trump seeks to enact tariffs and redraw agreements with trading partners.

That will increase attention on today’s $42 billion sale of 10-year Treasuries, with the results due just after 1 p.m. ET/1700 GMT, for any indications that foreigners are boycotting U.S. debt in response to Trump’s policies.

“There remain lingering fears of an overseas buyers’ strike in retaliation for Trump’s trade-war agenda,” Ian Lyngen and Vail Hartman, interest rate strategists at BMO Capital Markets, said in a report. “Taiwan’s dollar surge has led to a greater focus on the outlook for the nation’s hedging strategies and holdings of US Treasuries.”

Taiwan owned $295 billion in Treasuries as of February, according to government data.

Concerns about foreigners withdrawing from the U.S. Treasury market have primarily focused on Japan and China, the two largest foreign holders of U.S. debt, but so far there have no concrete signs that they have been paring holdings or refusing to buy the assets.

A $39 billion sale of 10-year notes on April 9 saw much higher than usual demand by indirect bidders, which includes foreign central banks, allaying some concerns about foreign demand.

Meanwhile “the move in the TWD suggests that capital is now being repatriated, not merely reallocated across borders,” Felix-Antoine Vezina-Poirier, Strategist at BCA Research said in a note. “Taiwan’s currency flows are driven primarily by private life insurers, not sovereign actors, adding credibility to this rotation.”

(Karen Brettell)

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TUESDAY'S EARLIER LIVE MARKETS POSTS:

PRE-LIBERATION DAY TRADE DEFICIT HITS RECORD CLICK HERE

NEAR-TERM VOLATILITY ASIDE, MEXICO COULD WEATHER THE TARIFF STORM QUITE WELL - CLICK HERE

US GDP BRACES FOR SUBTLE HIT AS STUDENT LOAN PAYMENTS EMERGE FROM THEIR PANDEMIC PAUSE CLICK HERE

U.S. STOCKS PULL IN THEIR HORNS AS FED MEETING KICKS OFF CLICK HERE

S&P 500 INDEX'S MOVING AVERAGE WALL TRUMPS WIN STREAK CLICK HERE

HIDDEN RALLY? MARKET BREADTH SURGES TO NEW HIGHS CLICK HERE

EUROPE INC: A 'WAIT AND SEE' REPORTING SEASON CLICK HERE

BANK EARNINGS POSITIVE BUT STOCKS BEHAVING STRANGELY - UBS CLICK HERE

HERE'S WHY THE BOE COULD BE SET FOR A HAWKISH SHIFT CLICK HERE

STOXX SLIPS, GERMANY AND EARNINGS IN FOCUS CLICK HERE

EUROPE BEFORE THE BELL: FUTURES MIXED CLICK HERE

DOLLAR SELLING TAKES A BREATHER CLICK HERE