NEW YORK (Reuters] – The net foreign inflows into Treasuries increased in January for the third month straight to $74.36billion, according data from U.S. Treasury on Tuesday.

Treasury International Capital data shows that $62.22 billion was bought by foreign investors from overseas and $12.29 billion were purchased by official agencies of the United States in January.

In eight out of the past twelve months, Treasuries were purchased by foreigners. This includes a record monthly net purchase of $118 Billion in March 2021.

The data revealed a net TIC flow of $294.2 trillion. This included net foreign inflows of $270.8 billion and net foreign official flows of $23.4 billion.

However, total foreign holdings fell as yields increased.

The benchmark U.S. 10-year Treasury yields reached a peak of 1.9020% at January, and ended January at 1.7838% at the end. This is up 27 basis points over December.

In January, the yield of the 2-year note increased to 1.1846% from 0.7341%. This was because markets expected a Federal Reserve rate increase to reduce inflation and slow rising prices.

On Wednesday, the Fed will raise its policy interest rate by 0.25 percent, its first increase since 2018. It also announced that it has stopped buying bonds during the pandemic. This is in an effort to shrink its huge balance sheet. There are likely to be several more rate increases this year as well.

Custodian countries such as the United Kingdom (Belgium, Ireland, Luxembourg, and Ireland led to a drop in Treasury securities foreign holdings to $7662 trillion from $7747 trillion.

An U.S. Treasury security bought by a foreign national is not reflected in the account’s true ownership if it’s held in a custodial bank in another country.

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Gennadiy Silverberg, senior U.S. Rates strategist at TD Securities stated that this was in line with Treasuries sell-offs.

Although Japan was the biggest non-U.S. Treasuries holder, its Treasury securities holdings fell to just $1 billion to $1.303 trillion.

China was the 2nd largest Treasuries holder after China. Its holdings declined to $1.060 trillion, from $1.068 trillion in Dec.

Goldberg stated that this is consistent with the huge jump in rates we witnessed early in the year, based on higher global economic growth expectations and possibly more hawkish central bankers. The data matches perfectly the prices at the beginning of the year, so the data is clear.”

U.S. corporate bond inflows in other asset classes were $7.62 Billion in January. This is a reverse of December’s $4.02 Billion net outflow.