Foreigners increased their purchases of long-dated US securities in November, a period when investors were risk-averse due to the euro zone debt crisis and money flowed into US government bonds, a Treasury report showed on Wednesday.
The United States attracted net long-term capital inflow of $59.8 billion in November compared with a revised inflow of $8.3 billion the previous month. Including short-dated assets such as bills, the US economy attracted inflows of $48.6 billion compared with a revised ouflow of $39.6 billion in October.
Overseas appetite for US Treasuries expanded to $54.0 billion from purchases of $15.3 billion in October. Treasury purchases were split between private investors and official institutions, with the former buying $30.3 billion and the latter purchasing $23.7 billion.
China's holdings of US Treasuries, however, continued to slide, with a total of $1.132 trillion in November from $1.134 trillion the previous month. Japan, however, raised its holdings of US Treasuries to $1.038 trillion from $979 billion in October and this was reflected in the increase in the country's foreign securities based its reserve data. On the other side, Switzerland sold a net $17.8 billion in Treasuries, with total cumulative sales of $33.2 billion the last 3 months.
"The broad story continues to point to decent demand for long-term Treasuries fairly well spread across the private sector and the official sector, with the Bank of Japan temporarily more than making up for selling by the Swiss National Bank and the absence of the People's Bank of China," said Alan Ruskin, global head of FX strategy at Deutsche Bank in New York. Foreign investors, meanwhile, sold US equities, with an outflow of $7.1 billion, compared with inflows of $2.8 billion in October. There was also some agency buying from foreigners to the tune of $6.12 billion in November after purchases of $4.7 billion the previous month.