June Net Foreign Purchases Of Long-Term US Securities $71.3 Billion
17 August 2009 - 3:31PM
Dow Jones News
Foreign demand for long-term U.S. financial assets grew in June,
according to a Treasury Department report released Monday.
At the same time, China trimmed its holdings of U.S. Treasury
securities from $801.5 billion in May to $776.4 billion in June.
Meanwhile, Japan and the U.K. slightly boosted their holdings.
Overall, net foreign purchases of long-maturity U.S. securities
totaled $71.3 billion in June following sales of $36.9 billion the
month before.
The monthly Treasury report highlights cross-border acquisitions
of securities with maturities of more than one year including
non-market transactions such as stock swaps and principal repayment
on asset-backed securities.
The closely-watched figure excluding transactions that don't
occur on an open market recorded net buying of $90.7 billion in
long-term U.S. securities, after sales of $19.4 billion in May,
according to the monthly Treasury International Capital report,
known as TIC.
The report's most comprehensive category, "monthly net TIC
flows," includes non-market flows, short-term securities and
changes in banks' dollar holdings. This measure of net foreign
capital outflow was $31.2 billion in June, versus an outflow of
$65.7 billion the previous month.
Financial market analysts consider the monthly data from the
Treasury Department to be a significant but imprecise gauge of how
easily the U.S. can finance its trade deficit. The June TIC flow
compares with the $27.01 billion trade deficit during the month,
reported last week by the Commerce Department.
Within the long-term securities category, foreign net purchases
of U.S. Treasury notes and bonds was $100.5 billion in June,
compared with net sales of $22.6 billion in May.
Private foreign investors bought a net $77.6 billion in Treasury
notes and bonds in June, after selling $343 million the previous
month. Meanwhile, foreign official institutions such as central
banks bought a net $22.5 billion of these Treasurys, compared with
net sales of $21.8 billion the month before.
Net foreign purchases of debt issued by U.S.
government-sponsored agencies like Fannie Mae (FNM) and Freddie Mac
(FRE) totaled $5.1 billion in June, compared with a $12.8 billion
in purchases in May.
For U.S. equities, net foreign purchases totaled $19.1 billion
in June, compared with purchases of $16.7 billion the previous
month.
For corporate bonds, net foreign sales were $1.0 billion, versus
purchases totaling $927 million the previous month.
China, according to the June data, held on to its new title as
the largest holder of U.S. Treasury securities. China's holdings
totaled $776.4 billion, followed by Japan's $711.8 billion and the
U.K.'s $214.0 billion.
The TICs data, typically released around the 11th business day
of the month, can be found on the Treasury's Web site at:
http://www.treas.gov/tic. With each monthly release, Treasury
revises the previous month's data as well.
The next report, covering July, is scheduled for release on
Sept. 16, 2009.
-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9255,
maya.jackson-randall@dowjones.com