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Zephyr

10/22/13 9:26 AM

#617157 RE: Zephyr #617156

Treasury International Capital
Released On 10/22/2013 9:00:00 AM For Aug, 2013
Prior Prior Revised Actual
Foreign Demand for Long-Term U.S. Securities $31.1 B $31.0 B $-8.9 B
Highlights
Foreign demand for U.S. securities has been unusually soft this year with outflows in six of the last seven months. August's net outflow is $8.9 billion with weakness centered in foreign demand for equities where the outflow is a steep $16.9 billion.

Corporate bonds show a small gain and agency bonds show a big gain, but foreigners were big sellers of Treasuries for a second month in a row. Chinese holdings of Treasuries, at a total $1.27 trillion, have been flat this year and fell back in August. In contrast Japanese holdings, at $1.15 trillion, have been on the rise and include a gain in today's report.

Deepening this year's investment outflow has been active buying of foreign securities by US accounts. Net buying of foreign long-term securities totals $0.4 billion following July's heavy outflow of $15.7 billion.

Expectations of Federal Reserve tapering, strong expectations that didn't pan out, added to a rare investment outflow from the United States, at least from May to August. This report next month will offer a look at investor reaction to the surprisingly dovish outcome of the mid-September FOMC meeting.