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Wednesday, January 19, 2011

Foreign Investors Resume Large Purchases of U.S. Assets


Foreign investors stepped up their purchases of U.S. assets in November after the FOMC decided to resume its Treasury purchases. Foreign investors bought a net of $85 billion of U.S. equities, notes and bonds from an upward revised $29 billion in October. The November purchases were the most in a few months (since August). Perhaps related to QEII, foreign investors were net sellers of short-term U.S. securities, like bills and stock swaps. When these short-term instruments are taken into account, foreign investors bought $39 billion of U.S. assets, more than twice the $15 billion purchased in October.

Returning to long-term assets, private sector flows dominated. Foreign official accounts bought $4.7 billion while private sector bought $61.7 billion. U.S. residents appeared to step up their purchases of foreign assets, purchasing nearly $82 billion of long term securities.

Foreign investors purchased $13.3 billion of U.S. equities after $16 billion in October. Foreign investors also took $4.7 billion in corporate bonds from $1.1 billion in October. China seemed to reduce its Treasury bond holdings by about $11 billion. But, as we have noted, flows could go through a different financial center, like London.

Gary J. Tippner
Short Sales and Foreclosure Resource SFR Certified  
Network Real Estate
DRE# 01871153
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