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. Why Investors Care
| Released on 9/18/07 For Jul 2007 | ||||||||
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Highlights
Net foreign purchases of long-term U.S. securities fell off a cliff in July, at only $19.2 billion vs. $97.3 billion in June. The data may show an early effect from the subprime mess that reached a height in August. Net foreign holdings of short-term securities jumped by $66.6 billion in the month vs. a decline of $27.6 billion in June. Foreign holdings of T-bills rose by $18.7 billion. Demand for cash or equivalents was a chief feature of August's credit-market crunch.
On the long-term side, net foreign purchases of Treasury bonds and notes fell $9.4 billion. But the decline was more than made up by strong net foreign purchases of government agency bonds, +$8.7 billion, corporate & other bonds, +$4.2 billion, and equities, +$.4.2 billion. Whether demand for agencies, corporates and stocks withstood the August market meltdown will be closely watched in next month's report.
Foreign demand for U.S. securities was unusually strong going into the financial market crunch, a factor that will limit the damage from July's data. But early indications from weekly Federal Reserve data show recent declines in Treasury holdings by foreign central banks. This and the continued surge of flows into short-term securities definitely point to trouble for August's TIC data. There was little immediate reaction to today's data but the results may very well weigh on all U.S. assets, especially the dollar, going into this afternoon's FOMC statement.
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