Global| Oct 16 2003Foreign Purchases of U.S. Securities Smaller in August, but Still Large by Historical Standards
Summary
The US Treasury today published its array of monthly data on foreign investors' purchases and sales of "long-term" US securities (having maturity greater than one year) for August. Known as the "TIC" data for Treasury International [...]
The US Treasury today published its array of monthly data on foreign investors' purchases and sales of "long-term" US securities (having maturity greater than one year) for August. Known as the "TIC" data for Treasury International Capital", this extensive collection of information on foreign participation in US capital markets is contained in Haver's USINT database in the section "US International Investment Tables", shown by security type and country. In August, net foreign purchases of securities traded in US markets totaled $53 billion, down from July's $73.4 billion, but well above the $42.2 billion of August 2002.
Indeed, as seen in the graph, the volume of foreign purchases in US markets has climbed fairly persistently over the last 10 years, so that the monthly amounts in 2003 are largely without precedent. The graph also shows that this pattern is somewhat a mirror image of the US current account deficit, which has climbed fairly persistently over the last 10 years. Obviously, these security purchases do not account for all of the financing, but they have grown along with that deficit.
At the same time, these financial transactions are quite varied in both magnitude and mix even from month to month. As the table below shows, the reduction in total net purchases from July to August was largest in Treasury securities, no doubt part of the bond market sell-off that occurred during the summer. By contrast, the recovery in the stock market is apparent in the huge turnaround in foreign purchases of US stocks, from a net liquidation in July to the largest net increase since late 2001. Thus, market forces are interrelated with these capital flows and may be just as important a determinant of their size and direction as the economic reverberations from the current account.
| Net Foreign Purchases of Securities in US Markets (bil $) | Aug 2003 | July 2003 | June 2003 | Aug 2002 | Monthly Average
|---|---|---|---|---|
| 2002 | 2001 | 2000 |
| Total | 53.0 | 73.3 | 90.7 | 42.2 | 47.9 | 41.8 | 36.7 | |
|---|---|---|---|---|---|---|---|---|
| Treasuries | 25.2 | 44.7 | 44.0 | 4.3 | 10.0 | 1.5 | -4.5 | |
| Federal Agencies (mostly "GSEs") | 9.8 | 11.8 | 7.0 | 17.4 | 16.3 | 13.7 | 12.7 | |
| US Corporate Bonds | 18.7 | 26.4 | 22.8 | 14.5 | 15.2 | 18.5 | 15.3 | |
| US Corporate Stocks | 11.6 | -7.9 | 10.3 | 4.6 | 4.2 | 9.7 | 14.6 | |
| Foreign Bonds | 1.0 | 3.0 | 11.7 | -1.7 | 2.4 | 2.5 | -0.3 | |
| Foreign Stocks | -13.4 | -4.7 | -5.2 | 3.1 | -0.1 | -4.2 | -1.1 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
