A survey coming out this week could soften the blow of the Treasury International Capital data, which has caused volatility in the Treasury market on fears foreign interest in U.S. securities is waning. The preliminary results of the annual survey, to be finalized in June, may show TIC data underestimates purchases of Treasuries, according to Lou Crandall, chief economist at Wrightson ICAP. "If the market knows the TIC data has been underestimating purchases of Treasuries by $5-10 billion each month, then [market participants] will have a better idea of what to expect," he said.
The 2004 survey is especially anticipated as it covers a year of explosive build-up of foreign currency reserves. Crandall declined to speculate how much of an impact the changing view of TIC data could have on bond yields.
The survey's final results may also show foreign buyers are diversifying their maturities. "Foreign buyers have been going further out along the curve to pick up yield," Crandall noted. The survey may show holdings, normally concentrated in the one-to-two-year sector, could spread to the five-to-10-year bucket, he said.
