Capital Flow Watch » Foreign Investors

Foreigners shun US financial assets - Deficit spending

John Schroy — Tue, 16 Jun 2009 10:29:07 +0000

Foreign flows into US debt markets is down 99.2% from 2006 levels.In reaction to the profligate behavior of the Pelosi-Reid Congress, foreigners have been moving from financial securities and bank deposits into direct investments and miscellaneous assets, such as real estate.Continued deficit spending by the Obama administration should drive foreigners to seek safer, non-dollar havens.

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Will China become America’s landlord? - The decline of the dollar

John Schroy — Mon, 30 Mar 2009 17:10:43 +0000

Foreigners hold $16.9 trillion in dollar financial assets, accumulated through years of selling goods and services to the US. Profligate deficit spending by the Pelosi-Reid Congress increases the probability of dollar inflation.If foreign governments were to convert their holdings of dollar financial assets into non-financial assets, like US REITs, they can guard against dollar inflation. They might also gain a position that, in the extreme, would be against US national security interests.

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Signs of US losing its groove? - World economy

John Schroy — Tue, 10 Oct 2006 18:34:52 +0000

Thirty years ago, about the time the world went off the gold standard, US income from abroad was more than double the amount of income that the US paid to the rest of the world.This surplus of investment income from abroad has been gradually diminishing. This year, or the next, this foreign income surplus may disappear forever. Does this mean that the US is 'losing its groove'?

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Foreigners reduce support for US Treasuries - Q1 2006

John Schroy — Wed, 28 Jun 2006 19:11:43 +0000

Although foreign investors continue to be the largest purchasers of most types of US bonds, this sector showed less interest in treasuries than in the past, shifting assets into short-term repurchase agreements in Q1 2006. If the Federal Reserve continues to push short-term interest rates upwards and if foreign investors continue to move into short-term fixed investments, such as repurchase agreements, long-term interest rates may be forced higher.

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Trade deficit continues to support bonds - Q1 2006

John Schroy — Tue, 20 Jun 2006 20:53:02 +0000

In Q1 2006, the excess of US imports over exports continued to provide dollars to the rest of the world, which were invested in the US bond market.Although foreign central banks reduced flows into US treasuries and agencies after the high point of 2004, the shortfall has been more than covered by flows into bonds from foreign private sources. The driving force behind foreign purchases of US bonds is not so much related to interest rates as to worldwide neo-mercantilist impulses to favor exporters.

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Foreign investors help stabilize US markets - US Trade Deficit 2005

John Schroy — Wed, 15 Mar 2006 10:49:36 +0000

Foreign funds created by the record US trade deficit of $726.9 billion in 2005 were channeled mainly into the US bond market. This went a long way towards keeping bond prices up, despite massive net corporate bond issues connected with asset-backed securities (mostly mortgage related) that also set impressive records: $462.9 billion.Foreign investors purchased (net) $214.1 billion in US Treasury securities and $351.1 billion in corporate bonds.

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