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April’s TICs data are in — the month’s snapshot of US long-term capital inflows, taken in this instance at the height of the Greek debt crisis.
There’s therefore a slight whiff of a flight to safety in the data.
Net private acquisition of long-term US securities totalled $61.2bn in April, according to the release — a ‘very strong’ turnout, says Alan Ruskin of RBS.
Ruskin adds that this now takes us up to $250bn of inflows in 2010, and that different types of investor are now coming back to the escape pod party:
The sources of inflows are broadening with corporate bond inflows solid, and foreign interest in US equities remaining strong. The Caribbean was big buyers of equities (and a rare seller of Treasuries) suggesting hedge funds were taking a risk positive view of US assets in April.
A view they might have regretted a month later, we suspect.
Moving swiftly on, Ruskin notes that China’s (rather mysterious) Treasuries activities are also calming down:
China’s holdings of Treasuries went up by $5bn, again confirming that they are a small part of the net inflows UNLESS there is more China flow coming through the UK, where Treasury holdings increased by $42bn after a very strong $46bn the prior month.
The rundown in Treasury bills after the crisis appears to have ebbed, and the long-term securities buying is not simply a shift of funds from bills into bonds – which had been a pattern for big players like China for much of the past year.
China actually bought $1.5b Treasury bills in April and their bill holdings may well stay static from here near $40bn.
Finally, US outflows (for example to Asian equities) have also picked up at the same time, Ruskin says, but they’re swamped by these huge inflows:
The scale of the long-term flows are dwarfing the C/A while the foreign inflows into treasuries of 1yr and longer maturity at $800bn in the last year are obviously the major contributor to budget deficit financing. Presumably much of this flow is coming to the US by default given the EUR areas travails, and the boon to USD and USD assets, notably bonds is obvious, despite the US’s own twin deficit failings.
Er…. USA! USA! USA!
Related links: Treasuries of the Caribbean (and China, and the UK) – FT Alphaville China's punishment, Treasuries' pain – FT Alphaville Treasuries, dollars and common sense – FT Alphaville
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