CryptoSlate
Private foreign investors sold a net $29.1 billion of US Treasury notes and bonds in July while simultaneously buying $45 billion of short-dated bills, according to Treasury International Capital (TIC) data released this week. Bills mature within a year; notes run two to ten years and bonds stretch twenty to thirty, so the rotation reads as a defensive shift toward cash-like government paper rather than a vote of confidence in duration. Foreign official institutions partially backfilled the long end, buying $25.5 billion of notes and bonds while selling $6.3 billion of bills. Even so, the combined long-duration flow ran slightly negative, and net foreign acquisition of all long-term securities came in at negative $27.9 billion after adjustments.
Why it matters
Long yields move the cost of money for everything else. The 10-year Treasury yield climbed from 4.48% to 4.75% during July, while the 30-year rose from 4.97% to 5.27%. By mid-September, the curve still sat at 3.96% on the one-month and 5.01% on the 10-year, a 105 basis-point gap that prices in persistent term premium. The Federal Reserve's financial conditions framework treats Treasury yields alongside private borrowing rates, equities and the dollar, so long-end pressure transmits broadly into risk-asset pricing. That matters for Bitcoin, a non-yielding asset whose appeal shrinks as the risk-free rate climbs and credit tightens.
Market impact
The mechanism runs through opportunity cost rather than direct rotation. When foreign private capital parks in bills instead of bonds, it signals a preference for safety over duration and keeps the long end under pressure. Higher long yields lift the bar rate against which risk assets are priced, and tighter credit reduces the capital available for risk-on positioning. Treasury itself flags that monthly long-term holdings data are primarily custody-based and can obscure an asset owner's country, so the read comes with noise attached. The cleaner test of whether the duration squeeze is easing will be private foreign accounts returning to notes and bonds alongside a sustained decline in long yields, not merely another month of bill buying.
Frequently asked questions
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What did foreign private investors actually do in US Treasuries in July?
Per TIC data, private foreign investors sold a net $29.1B of Treasury notes and bonds while buying $45B of short-dated bills, a defensive rotation rather than a broad vote of confidence in US debt.
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How high did long-term Treasury yields climb?
During July, the 10-year yield rose from 4.48% to 4.75% and the 30-year climbed from 4.97% to 5.27%. By mid-September the curve still showed a 105bp gap between the 1-month and 10-year.
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Why does duration pressure threaten Bitcoin's rally?
Higher long yields raise the opportunity cost of holding a non-yielding asset like Bitcoin and tighten financial conditions through the Fed's framework, reducing the capital available for risk-on positioning.
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What would signal the duration squeeze is easing?
Private foreign accounts returning to Treasury notes and bonds alongside a sustained decline in long yields, not merely another month of bill-buying.
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What is TIC data and what does it track?
Treasury International Capital data track cross-border portfolio transactions and banking flows, released monthly by the US Treasury to capture foreign demand for US securities.
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