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Why Are Foreigners Cooling On Long-term U.s. Debt?

Brad Setser spots the trend: 

[F]oreign demand for long-term Treasuries has disappeared over the last few months. ... The rolling 3m[onth] sum bounces around a bit, but foreign demand for long-term Treasuries in November, December and January was as subdued as it has been for a long-time.

That's somewhat disconcerting, obviously, since we've been issuing a lot of debt lately. Paying a higher interest rate to entice foreign buyers could be crippling. Setser says there's need to panic yet--the decreased appetite for long-term Treasuries is a function of foreigners: a.) buying short-term Treasuries, and b.) having less money to invest (at least foreign central banks), not a loss of faith in the U.S. government. Still, the long-term implications are potentially worrying:

[I]f — as seems likely — foreign demand for Treasuries fades long before the US fiscal deficit, the US Treasury will need to sell an awful lot of Treasuries to American investors.

--Noam Scheiber