Tuesday, December 15, 2009

Scanning for Knowledge on the US$

The following is a press release from the Treasury:

December 15, 2009


Treasury International Capital Data for October

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for October 2009. The next release, which will report on data for November 2009, is scheduled for January 19, 2010.

Net foreign purchases of long-term securities were $20.7 billion.

Net foreign purchases of long-term U.S. securities were $43.4 billion. Of this, net purchases by private foreign investors were $28.8 billion, and net purchases by foreign official institutions were $14.6 billion.

U.S. residents purchased a net $22.7 billion of long-term foreign securities.

Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $8.3 billion.
Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities decreased $43.9 billion. Foreign holdings of Treasury bills decreased $38.3 billion.

Banks' own net dollar-denominated liabilities to foreign residents increased $21.6 billion.

Monthly net TIC flows were negative $13.9 billion. Of this, net foreign private flows were negative $32.1 billion, and net foreign official flows were $18.2 billion.

Complete data are available on the Treasury website at www.treas.gov/tic.

And this explanation from Bloomberg:
Why Investors Care

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.