The investors who kept their money in U.S. government bonds suffered about $317 billion loss because of falling securities’ quotes during last two months, Bloomberg said. However, large banks such as Mizuho, Deutsche Bank, and HSBC do not rush to get rid of Treasuries.
In May-June 10-year U.S. Treasuries lost overall 3.2%. The worries that the Fed could narrow its bond-buying program in the near future are said to be the reason for the slump.
As a result, a part of investors started to withdraw their money from bond funds, although the yields increased. On the whole, the net market losses are estimated at $79.8 billion in the previous month.
After 2008, foreign holdings of U.S. government securities rose significantly as investors considered them a safe haven amid the total meltdown. Thus, the U.S. government bonds owned by foreigners increased by twofold to $5.6 trillion during this period.
All the while, interest rates on the bonds were at record low levels, lagging behind the inflation rate in the United States. Nevertheless, investing in government bonds boosted bullish sentiment of investors.
Overseas countries also increased their capital inflows into U.S. government bonds. Chinese and Japanese holdings were the biggest with $1.3 trillion and $1.1 trillion, respectively.
