September 18, 2018 / 9:11 PM / a month ago

UPDATE 1-Foreigners buy U.S. Treasuries in July; China holdings slip -data

* U.S. 10-year Treasury yield hit 3 percent in July

* Russia’s Treasuries holdings little changed at below $15 bln

* Foreigners sold stocks but bought corporate, agency debt (Adds details, comment, bylines, graphic)

By Gertrude Chavez-Dreyfuss and Richard Leong

NEW YORK, Sept 18 (Reuters) - Foreigners bought U.S. Treasuries in July, led by private investors, data from the Treasury Department showed on Tuesday, in a safety move amid global trade tensions with China and Canada.

Data showed that U.S. Treasuries posted an inflow of $18.94 billion in July, after outflows of $48.57 billion the previous month. Treasury inflows were led by private investors, which bought $41.686 billion, offsetting selling by foreign official institutions to the tune of around $41.69 billion.

The U.S.-China trade conflict unfolded in May as both countries traded barbs, culminating in the United States slapping 10 percent tariffs on about $200 billion worth of Chinese imports on Monday.

China hit back at the United States, announcing tariffs on about $60 billion worth of U.S. goods, but reducing the volume of tariffs that it will collect on the products.

Benchmark U.S. 10-year Treasury yields hit a high of 3.016 percent in July.

Data also showed China’s Treasuries holdings declined to $1.171 trillion in July, the lowest since January, from $1.179 trillion the previous month. The world’s second largest economy remains the largest non-U.S. holder of Treasuries.

China’s July outflow of Treasuries was the third in the past four months.

“Recall that during the month of July, the renminbi depreciated 2.6 percent against the dollar, and this data is lagged before the August emerging market volatility period,” said rates strategists at BMO Capital Markets in New York.

Japan’s holdings, on the other hand, increased to $1.036 trillion from $1.030 trillion in June.

Japan’s Ministry of Finance said earlier this month domestic investors bought about $6.3 billion worth of U.S. bonds in July after selling them the previous two months. They remained net sellers of U.S. debt for the year, totaling about $54 billion so far as expectations of further rate increases from the Federal Reserve have propelled the dollar, making it more expensive for investors to hedge against the yen.

Russia’s holdings of Treasuries, meanwhile, were little changed from June in July at $14.907 billion, although they are down more than 80 percent from March. Previous data showed that Russia’s holdings had already posted a massive drop to $48.7 billion in April from $96.1 billion in March.

In early April, the United States imposed sanctions on a number of Russian businessmen and their companies, with Oleg Deripaska and Rusal, the world’s largest aluminum producer, which he controls, taking the biggest hit.

Data also showed that foreigners further pared stock exposures for a third straight month, selling $14.01 billion in July.

In addition to Treasuries, overseas investors increased their U.S. bond holdings. They bought corporate bonds for a sixth consecutive month, adding $3.95 billion to their holdings. They also purchased $31.77 billion in agency securities, the highest monthly amount in two years, the latest data showed.

Reporting by Gertrude Chavez-Dreyfuss and Richard Leong Editing by Chizu Nomiyama and James Dalgleish

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