Your Economy (No Politics)

[Bullwinkle]

U.S. January capital inflows rise to $66 bln
Wed Mar 15, 2006 10:13 AM ET
By Mark Felsenthal


WASHINGTON, March 15 (Reuters) - Net flows of capital into U.S. assets rose to a more-than-expected $66 billion in January, shy of the $68.5 billion trade deficit that month, a Treasury Department report showed on Wednesday.

Net foreign purchases of U.S. Treasury bonds and notes slowed to a smaller-than-expected $4.4 billion.

The dollar initially slipped back toward the lower end of intraday trading ranges and Treasury debt prices briefly extended early losses after release of data showed capital inflows failed to cover January's deficit.

Analysts said the slowdown in Treasury buying may show investors are shopping more broadly for buying opportunities.

"One, foreign investors are looking for yield by diversifying and two, there might be less rolling over of Treasuries going forward at least by some Asian investors, reflecting perhaps better global growth prospects," said Joseph Lavorgna, chief fixed-income economist for Deutsche Bank Securities in New York.

Analysts were expecting net inflows into U.S. assets of $65 billion and Treasury buying of $18.1 billion. December inflows were revised down to $53.8 billion from a previously reported $56.6 billion.

Excluding foreign stocks and bonds, net capital inflows rose to $78 billion from a revised $74.6 billion in December, the report said.

Total private flows into U.S. assets eased to $57.9 billion in January from $64.2 a month earlier. Official inflows jumped to $20.2 billion from $10.4 billion.

Net purchases of U.S. corporate bonds dipped to $25.8 billion from $35.2 billion in December.

Foreign buying of U.S. equities surged to $21.2 billion from $9.5 billion the previous month.

Also, net purchases of U.S. long-term agency bonds leaped to $26.7 billion from $11.6 billion in December.

Among the top foreign holders of U.S. Treasuries, Japan's holdings slipped to $668.3 billion from $684.9 billion in December. China's holdings climbed to $262.6 billion in January from $256.7 billion the previous month.

United Kingdom holdings of Treasuries rose to $244.8 billion from $234.4 billion, while Caribbean banking center holdings -- seen as a proxy for hedge funds -- slipped to $97.9 billion from $111.2 billion.

http://today.reuters.com/investing/financeArticle.aspx?type=economicNews&storyID=2006-03-15T1513...