The "TIC" data for May were reported yesterday by the US Treasury, showing some rebound in foreign purchases of securities in US markets after two slower months. "TIC" is an acronym for Treasury International Capital, a collection of monthly data on securities transactions and banking system assets and liabilities with foreign customers. The data show only the first transaction with a non-US resident, and may not indicate the nationality of the ultimate counterparty in the transaction. These data are contained in Haver's USINT database.

Last month (June 15), we noted that foreign net purchases of US securities were more modest in March and April than in prior months. May saw a somewhat larger figure, $60.0 billion, compared with $47.7 billion in April and $40.5 billion in March. In the weaker spring months, purchases of federal agency securities ("GSEs") had been quite low, but they recouped nicely in May, to $22.7 billion from roundly $7 billion each in March and April. Treasuries, by contrast, have been fairly steady, with total foreign net purchases around $25 - $27 billion per month. Corporate bond purchases in May remained near their recent $20 billion amounts, but foreign investors made nearly offsetting purchases and sales of US stocks. Net foreign liquidation of foreign securities in US markets continued, with net sales of both bonds and stocks.

Our table this month highlights several geographic areas, Japan, China, the UK and the Cayman Islands. Over the past year and in 2004, these four places accounted for just about 60% of foreigners' net purchases in US markets. Japan remains active, but has slowed its purchases somewhat, reflected in reduced net buying of Treasuries; even so, it remains the largest foreign owner of Treasuries, according to other TIC data. China's purchases remain more modest both than Japan's and than the US bilateral trade position with China might imply. But in several months recently, China's buying has been larger than Japan's, and that could well continue. Also, these are transactions in long-term securities (maturity greater than 1 year) and still other TIC data show that China has increased its holdings of short-term Treasury securities.

UK activity has been a bit slower in the last two months, but longer comparisons show consistent net buying that averages around $14 billion monthly. This may reflect London's status as a world financial center and ultimate owners in many of these transactions could well live elsewhere. The same is also very likely to be the case for the Cayman Islands. Net purchases through that "offshore" financial center were $12.4 billion in May and have averaged $7.9 billion over the last year. Buyers from the Caymans are fairly consistent in their purchases of corporate bonds, while their activity in the Treasury market varies widely from purchase to sale in individual months.