US: Treasury International Capital

Fri Apr 15 15:00:00 CDT 2016

Actual Previous Revised
Foreign Demand for Long-Term U.S. Securities $72.0B $-12.0B $-11.9B

Foreign accounts were buyers of U.S. long-term securities while U.S. accounts were big sellers of foreign securities, resulting in a net February inflow of $72.0 billion vs a revised outflow of $11.9 billion in January. Foreign accounts purchased a net $28.3 billion of securities in the month while U.S. accounts, in unusually heavy selling centered all in foreign bonds, sold a net $43.7 billion of foreign securities. By category, agency bonds showed the biggest net inflow into the U.S., at $18.5 billion, with corporate bonds at plus $11.0 billion and Treasuries at $9.9 billion. A negative, however, is once again a net outflow for U.S. equities, at $11.1 billion. China continues to lead all Treasury holders at $1.25 trillion for a $15 billion gain in the month with Japan also showing a gain, up nearly $10 billion to $1.13 billion.

These Treasury data track the flows of financial instruments into and out of the United States. Instruments tracked include Treasury securities, agency securities, corporate bonds, and corporate equities.

TIC data have been issued for the past 30 years, but only recently, due to an enormous rise in foreign participation in our markets, have they grabbed the attention of the international financial markets. Although methodologically limited, TIC offers a measure of foreign demand for our debt and assets. Bonds and the dollar are most sensitive to the data, therefore bond and foreign exchange markets are more likely to react to this report than the equity market. Strong inflows (demand for U.S. securities) are needed to keep downward pressure on interest rates. Strong inflows also underpin the value of the dollar since foreigners must purchase dollars in order to buy our securities. A strong dollar helps to maintain stability in all U.S. financial markets. Since foreign ownership of U.S. equities is comparatively small, the equity market is less concerned about this report.