The U.S. Treasury’s International Capital Flows (TIC) report shows that foreign investors again sold a net amount of U.S. Treasury and corporate debt in December.
The U.S. TIC report is a monthly release of international capital flows data from the U.S. Treasury Department that includes the movement of foreign purchases and sales of U.S. Treasuries, government bonds, corporate bonds and corporate equities to measure the status of foreign demand for U.S. debt and assets. The next release, which will report data for January 2021, is scheduled for March 15, 2021.
The latest data show that foreign investors continue to sell off U.S. debt, but they purchased a record number of U.S. stocks in 2020.
Let’s look at bonds specifically first. Total foreign holdings of U.S. Treasuries fell for the fifth consecutive month, with foreign investors holding $7.036 trillion at the end of December, down from $7.054 trillion at the end of November.
The yield on the 10-year Treasury note rose to 0.912% from 0.847% in December as investors expect rapid growth in the U.S. economy after the outbreak.
Japan reduced its holdings of U.S. debt by $4 billion in December to $1.257 trillion, but remains the largest overseas holder of U.S. Treasuries. China reduced its holdings of U.S. debt by $1.5 billion in December to $1.062 trillion.
Net inflows of long-term securities totaled $121 billion in December, down from $149.2 billion in November. Total net inflows of long-term securities were $505.7 billion for the 12 months ended Dec. 31, up from $389 billion for all of 2019, the Treasury Department said.
On the foreign demand side of U.S. equities, foreign investors purchased a staggering $368 billion of U.S. equities in 2020 ($294 billion by official institutions and $74 billion by the private sector), thanks to a $78.3 billion buying spree last December.
This figure is more than triple the 2010 and 2012 totals, more than double the 2009 figure ($152 billion) and more than 50% higher than the previous largest year, 2007 (when total purchases exceeded $195 billion).
Overall, December saw net sales of U.S. Treasuries and corporate bonds and net purchases of government agency bonds and equities:.
Treasuries: -$20.7 billion
Government agency bonds: +$51.2 billion
Corporate bonds: -$11.4 billion
Corporate equities: +$78.3 billion
Finally, it is worth noting that while overall overseas U.S. Treasury holdings have remained stable, there is still a significant gap to be made between them and the Gold holdings of countries over the past year.
Recent Comments