I absolutely agree with both of your points, MM/FSD, that such would put downward pressure on bond prices and that the money would get parked elsewhere.
Look at the today’s TIC report for April, and you’ll see that foreigners are now buying FNMA/GNMA bonds, corporate bonds, and corporate equities (lines 6-8 and 11-13) while selling their Treasury bonds (lines 5 and 10).
