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More Paraquat on the Green Shoots: Foreign buying of US securities drops in April
Foreign buying of US securities drops in April
Mon Jun 15, 2009 3:38pm EDT
(Recasts, adds comments, details)
By Vivianne Rodrigues
NEW YORK, June 15 (Reuters) - Foreign investors bought fewer U.S. Treasuries in April as easing risk aversion and a rally in commodity prices and global stocks pulled cash away from the United States that month, a Treasury Department report showed.
Excluding swaps, international investors bought a net $11.2 billion in long-term U.S. securities in April, down from a revised $55.4 billion in the prior month.
Net long-term capital flows are a key gauge of foreign investor appetite because they exclude short-term transactions. Still, analysts said the outflows from U.S. assets in April were consistent with an improvement in global risk appetite.
In recent months, an aversion to higher-risk investments has boosted demand for assets denominated in U.S. dollars.
"The risk-seeking rally that began in March likely spurred increased interest in foreign assets by both U.S. and foreign investors, as foreign investors sought to repatriate their assets," said Benedikt Germanier, a currency strategist at UBS AG, in Stamford, Connecticut.
The report also showed a monthly net capital outflow from the United States of $53.2 billion in April, compared with a monthly inflow of $25.0 billion in March.
In the same period, the U.S. trade gap widened to $29.2 billion.
Total net foreign purchases of U.S. Treasury bonds fell to $41.89 billion in April, from $55.3 billion in March but analysts downplayed growing concerns of sated appetites for U.S. debt as the Obama administration raises trillions of dollars.
"The dollar continued to lose ground as investors sought riskier assets but foreign appetite for Treasuries remained strong," Germanier added.
Treasury yields have been rising recently in part on concerns that countries such as China and Russia may diversify their reserves away from dollar assets at a time the U.S. Treasury intends to issue some $2 trillion of debt.
Yields on the benchmark 10-year Treasury note hit 4 percent last week, the highest since October.
CHINA'S HOLDINGS
"With the supply of U.S. Treasuries set to rise materially in coming years, amidst concern over falling demand from overseas, it is a little of a surprise that the U.S. Treasury yield curve has steepened recently," said Michael Woolfolk, a senior currency strategist at The Bank of New York Mellon.
China, the largest holder of U.S. Treasury securities, decreased its holdings of government bonds in April to $763.5 billion. In March, it held $767.9 billion.
Japan's Treasury holdings stood at $685.9 billion in April, compared with $686.7 billion in March, and Russian holdings also fell slightly to $137.0 billion versus $138.4 billion.
Total net foreign purchases of U.S. equities plunged to $4.58 billion in April from $13.15 billion in March. Meanwhile, foreign investors sold $9.73 billion worth of U.S. corporate bonds in April, compared with purchases totaling $3.54 billion in March.
The U.S. dollar was up on Monday versus the euro, which last traded down about 1.5 percent at $1.3773. (Reporting by Vivianne Rodrigues; Editing by Chizu Nomiyama)
Mon Jun 15, 2009 3:38pm EDT
(Recasts, adds comments, details)
By Vivianne Rodrigues
NEW YORK, June 15 (Reuters) - Foreign investors bought fewer U.S. Treasuries in April as easing risk aversion and a rally in commodity prices and global stocks pulled cash away from the United States that month, a Treasury Department report showed.
Excluding swaps, international investors bought a net $11.2 billion in long-term U.S. securities in April, down from a revised $55.4 billion in the prior month.
Net long-term capital flows are a key gauge of foreign investor appetite because they exclude short-term transactions. Still, analysts said the outflows from U.S. assets in April were consistent with an improvement in global risk appetite.
In recent months, an aversion to higher-risk investments has boosted demand for assets denominated in U.S. dollars.
"The risk-seeking rally that began in March likely spurred increased interest in foreign assets by both U.S. and foreign investors, as foreign investors sought to repatriate their assets," said Benedikt Germanier, a currency strategist at UBS AG, in Stamford, Connecticut.
The report also showed a monthly net capital outflow from the United States of $53.2 billion in April, compared with a monthly inflow of $25.0 billion in March.
In the same period, the U.S. trade gap widened to $29.2 billion.
Total net foreign purchases of U.S. Treasury bonds fell to $41.89 billion in April, from $55.3 billion in March but analysts downplayed growing concerns of sated appetites for U.S. debt as the Obama administration raises trillions of dollars.
"The dollar continued to lose ground as investors sought riskier assets but foreign appetite for Treasuries remained strong," Germanier added.
Treasury yields have been rising recently in part on concerns that countries such as China and Russia may diversify their reserves away from dollar assets at a time the U.S. Treasury intends to issue some $2 trillion of debt.
Yields on the benchmark 10-year Treasury note
CHINA'S HOLDINGS
"With the supply of U.S. Treasuries set to rise materially in coming years, amidst concern over falling demand from overseas, it is a little of a surprise that the U.S. Treasury yield curve has steepened recently," said Michael Woolfolk, a senior currency strategist at The Bank of New York Mellon.
China, the largest holder of U.S. Treasury securities, decreased its holdings of government bonds in April to $763.5 billion. In March, it held $767.9 billion.
Japan's Treasury holdings stood at $685.9 billion in April, compared with $686.7 billion in March, and Russian holdings also fell slightly to $137.0 billion versus $138.4 billion.
Total net foreign purchases of U.S. equities plunged to $4.58 billion in April from $13.15 billion in March. Meanwhile, foreign investors sold $9.73 billion worth of U.S. corporate bonds in April, compared with purchases totaling $3.54 billion in March.
The U.S. dollar was up on Monday versus the euro, which last traded down about 1.5 percent at $1.3773