Foreigners began 2012 by buying US Treasuries, US Treasury data showed on Thursday, with China resuming purchases and Japan's holdings climbing to a record. Net purchases of US Treasuries rose to $82.961 billion in January after net selling of $14.901 billion in December. China, the biggest foreign US creditor, increased Treasury holdings by $7.6 billion in January to $1.159 trillion.
Bank of New York Mellon termed China's January's purchases a significant improvement as China was a net seller of Treasuries from August to December, "selling a staggering $102.6 billion in December alone", the bank said. Japan, the second-largest holder of US Treasuries, increased their holdings to a record $1.079 trillion.
Overall, net long-term capital inflows were $101.046 billion up from the $19.12 billion the prior month. "China increased its purchase by $8 billion. So what?" said Eric Green, chief of US rates research and strategy at TD Securities in New York. "The downtrend in Chinese buying continues. Their net Treasuries position is still down $33 billion over the past 12 months. They will buy Treasuries but will buy them a slower rate."
Net overall capital inflows into the United States fell to $18.825 billion in January from December's revised inflow of $95.216 billion, not enough to cover the trade deficit for the month. The US trade deficit for January was $52.57 billion. The department originally reported a net overall inflow of $87.1 billion in December.