UPDATE 1-Foreigners buy less U.S. 2-year, 7-year note supply in August

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Sept 10 (Reuters) – Overseas investors purchased less two-year and seven-year U.S. Treasury note supply at the end of August, while they bought more five-year debt issues amid a dramatic bond market rally, Treasury Department data released on Tuesday showed.

Investors scooped up U.S. bonds last month on worries about U.S.-China trade tensions and a softening global economy.

Foreigners, a major group of holders of U.S. government debt, bought $3.897 billion of the $40 billion two-year Treasury supply offered on Aug. 27.

This was their smallest allotment at a two-year auction since September 2018 and was lower than the $7.111 billion they purchased the previous month, according to the Treasury Department’s auction allotment data.

They bought $2.779 billion of a $32 billion auction of seven-year debt offered on Aug. 29, down from $4.695 billion the prior month. This was their smallest seven-year award from the Treasury since October 2017.

On the other hand, the Treasury awarded overseas accounts $7.830 billion of the $41 billion in five-year supply on Aug. 28, up from the $4.709 billion they purchased the previous month.

Meanwhile, large investment managers bought $22.478 billion at the two-year note auction last month, up from the $19.995 billion they purchased the month before. This was their biggest purchase at a two-year auction ever.

The Treasury awarded big money funds $23.008 billion of the latest five-year note issue, compared with the $22.009 billion it allotted in July.

Fund managers bought $17.581 billion in seven-year debt offered in August, down from the $18.535 billion the previous month. (Reporting by Richard Leong; editing by Jonathan Oatis)

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