US: Treasury International Capital


Mon Sep 18 15:00:00 CDT 2017

Actual Previous
Foreign Demand for Long-Term U.S. Securities $1.3B $34.4B

Highlights
U.S. long-term securities were not in demand during July as net inflow totaled a marginal $1.3 billion. Foreign accounts were small net buyers of Treasuries and government agency bonds as well as corporate bonds. But they were active sellers of U.S. equities where the month's net outflow totaled $7.6 billion. China and Japan both added to their Treasury holdings with China up $19.5 billion in the month to $1.17 trillion and Japan up $22.3 billion to $1.11 trillion.

Definition
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.

Description
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.