Highlights
Net foreign purchases of long-term U.S. securities, reflecting the squeeze in the credit market, fell by $69.3 billion in August vs. an inflow of $19.5 billion in July. But the data show an increase in foreign holdings of short-term securities, up $33.9 billion vs. an increase of $56.2 billion in July when unusual demand for cash first started to appear. The short-term category generally shows a gain of about $10 billion a month.

But the long-term side, the side that best shows foreign confidence in U.S. securities, has suffered badly from the demand for cash. This category generally shows a monthly gain of about $90 billion, at least when markets are quiet. With Chinese and Japanese holders scaling back their Treasury holdings in the month, total net purchases of Treasuries fell by $2.6 billion. Foreigners continued to be net purchasers of agency bonds at $9.6 billion in the month but net totals for corporate bonds and equities both contracted with equities down a very steep $40.6 billion.

The dollar slipped in immediate reaction to the report as did Treasuries. The report may also prove to be a negative for the stock market through the session. The U.S. depends on foreign purchases of domestic securities to help balance its trade and fiscal deficits. Hopefully, the impact on foreign demand from the credit market dislocation in July and August will prove temporary.

2007 Release Schedule

Released On: 1/17 2/15 3/15 4/16 5/15 6/15 7/17 8/15 9/18 10/16 11/16 12/17 Released For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct