• 399 days Will The ECB Continue To Hike Rates?
  • 399 days Forbes: Aramco Remains Largest Company In The Middle East
  • 401 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 801 days Could Crypto Overtake Traditional Investment?
  • 806 days Americans Still Quitting Jobs At Record Pace
  • 808 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 811 days Is The Dollar Too Strong?
  • 811 days Big Tech Disappoints Investors on Earnings Calls
  • 812 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 814 days China Is Quietly Trying To Distance Itself From Russia
  • 814 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 818 days Crypto Investors Won Big In 2021
  • 818 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 819 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 821 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 822 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 825 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 826 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 826 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 828 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

More Declines in Asian Holdings of US Tsrys

Foreigners were net sellers of US long term securities in September at $14.7b after $150.7b in net selling in August. But foreign net long-term purchases showed a rebound to net buying of $26.4 bln after a net selling of $70.6 bln in August, which was the first net negative figure since August 1998, a month characterized by sharp declines in US stocks and treasuries when markets plunged following the LTCM collapse and Russia 's decision to drop its currency peg.

US equities received $2.5 bln in net buying after sustaining the biggest net selling in history in August at $40.7 bln. The rebound in net purchases of US corporates and Agencies did help the overall balance.

Japanese and Chinese Treasury holdings continued on the decline, as Japanese holdings reach $582 billion, the fourth consecutive monthly decline, and a 17% decline off the all time high reached in 2004. Chinese holdings reached $396 billion, extending their decline from the April high. While the impact of the dollar decline on reducing the value of these holdings is largely considered, it does not mitigate from the fact that net buying is being reduced. Case in point, the dollar has gained 22% against the yen since the peak in Japanese holdings of December 2004while these holdings have continued on the decline ever since.

The other side of the equation in the TICS story is becoming increasingly influential in determining the net figures, namely, US resident's flows in foreign assets. US resident's increased their net purchases of foreign stocks and bonds, bringing the total net outflow to $28.9 billion in September, the fifth highest figure on record. The fact that the 4 highest net outflows were all registered in 20007 reflects the increased interest in investing in non US stocks as well as US retail investors' awareness of the falling dollar.

Looking forward, the October and November TICS figures are expected to be similarly worrying considering the ominous combination of persistent deterioration in the dollar during those months as well as the ongoing pressure on equities, the main destination of foreign capital.

The unexpected 0.5% decline in October industrial production and the decline in capacity utilization to 81.7 from 82.2 is a rude awakening for the Federal Reserve especially as the report spanned a broad decline, from mining to factory output. With the steepening of the US yield curve at its highest since Match 2005, we expect further widening of the 10-2 year spread to come in line with further Fed cuts, placing our Fed funds target at 3.75% by end of Q2 2008.


Back to homepage

Leave a comment

Leave a comment