Canadians expressed their displeasure/Central banks attitude towards gold/If you didn't get a chance to buy the LA Lakers...

Canadians expressed their displeasure with their treatment by the US by selling $57.8 billion worth of US Treasuries in April. That was 13.5% of their $426.2 billion of month end March holdings and I have data going back to 2000 and there is not another month that saw more selling. In context though, they have been steady buyers for years so maybe this is just a one month adjustment/rethink but something to watch.

For the month of April overall there was a net reduction in foreign holdings of US Treasuries of $40.8 billion with all the selling coming from private holders as central banks bought a modest amount. Sellers came too from Hong Kong, Singapore, China, India, Korea, Norway, German, France and hedge funds in the Cayman's. The UK was the biggest buyer but that could be anyone using UK banks. Japan, the largest foreign owner, bought $3.7 billion worth.

As the US Treasury is issuing ever more paper, we need all the help we can get. I will say with the loosening of the SLR (supplementary loss ratio) requirements, don't expect any major bank buying of long end Treasuries. If they add to their holdings at all it will most likely be T-bills (especially after the experience of Silicon Valley Bank taking on too much duration risk) and I see more of the benefit in market making where dealers will make deeper, more liquid market as they'll be able to house more inventory.

Canadian holdings of US Treasuries

Speaking of foreign ownership of US equities, Torsten Slok had a great chart on this on Wednesday and you can see it's at a record high. I continue to argue that there is now a global reassessment to the extent they still want to own this much in US stocks. In April, according to the same TIC data as seen with Treasuries, foreigners sold a net $19 billion of US stocks with selling via central banks offsetting private buying.

I want to highlight here the importance too of FX moves on global equity market performance for those that don't hedge. A European owner of the S&P 500 is down 8.7% year to date but up 17% in the German DAX in euros and by 30% in dollars. The Spanish IBEX is higher by 20% in euros and by 33% in dollars. The Italian IBEX is up by 15% in local currency and by 28% in dollars. A yen buyer of Japanese stocks is down 3.7% but that same buyer is lower by 6% in the S&P 500. A Canadian buyer of the S&P 500 is down 3% ytd but enjoying a 7.2% rally in the TSX while a US buyer in dollars of the TSX is up by 12.5%.

Speaking of another reserve asset, gold, the World Gold Council released a few days ago its 2025 Central Bank Gold Reserves survey with responses from 73 of them, the most since they started this 8 years ago. Here were some highlights and I'll follow with some charts from them.