Global asset markets were jolted Thursday as investors fled for "safe havens" – including U.S bonds, sending the yield on the 10-year U.S. Treasury below the psychological 2.50 percent level.
But while weak growth data, deflation fears and dovish central bankers might be the main reasons behind this move, it appears strong buying from a small European country could be accentuating this move lower.
Investors see U.S. Treasurys as a port in any market storm. As demand for the assets rises, so does its price, which sends its borrowing costs, or yield, in the opposite direction. The sub-2.5 percent level seen on Thursday was the lowest seen since last October.
U.S. Treasury International Capital data released on Thursday showed that Treasury purchases in Brussels have surged higher, making Belgium the third largest foreign holder of U.S. government debt after China and Japan.
Belgian holdings have doubled over the last year and stood at $381.4 billion in March, up to $40.2 billion from the month before. Two-thirds of the $60 billion increase in foreign Treasury holdings in March were from the northern European nation, according to the data.
Some fixed income experts have told CNBC that the logical conclusion would be to believe that Russian investors, worried about having their assets frozen due to tensions over Ukraine, are now using clearing houses in Brussels rather than buying directly. However, a decline of $25.8 billion in Russian Treasury holdings in March to $100.4 billion can't fully explain this reason.