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Global buying of US assets rises over 7-fold
Source: Bloomberg News |
September 19, 2012, Wednesday
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Print Edition
Print Edition
INTERNATIONAL purchases of US financial assets rose more than sevenfold in July as investors sought shelter from the debt crisis in Europe. China increased its holdings of US Treasury securities after two months of declines.
Net buying of long-term equities, notes and bonds totaled US$67 billion during the month, up from net purchases of US$9.3 billion in June, the US Treasury Department said yesterday in Washington.
"The data suggest that European private investors used Treasuries and agencies to protect against deterioration in the euro financial markets in July," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. "That trend will likely continue into August's data."
US assets have maintained their attraction as Spanish banks are hemorrhaging deposits and European leaders are still squabbling over the next steps needed to overcome the sovereign debt crisis. A European Union finance ministers meeting in the Cypriot capital of Nicosia last Friday deadlocked over the timetable for a more unified EU banking sector.
Including short-term securities such as stock swaps, foreigners bought a net US$73.7 billion in July, up from net buying of US$15.1 billion in June.
Spain's financial industry is already backstopped by Europe to the tune of 100 billion euros (US$131 billion), and is reliant on 412 billion euros of gross borrowings from the ECB. Shrinking deposits are undermining the ability of banks to support economic growth even as the government debates whether to seek a bailout.
China remained the biggest foreign owner of US Treasuries in July after its holdings rose US$2.6 billion to US$1.15 trillion, according to the Treasury.
France lifted its holdings of Treasuries by 32 percent to US$64.8 billion, and the UK raised theirs to US$140.9 billion from US$137.8 billion. Switzerland's holdings rose 10.7 percent to US$190.1 billion.
International net purchases of US Treasuries rose to US$50 billion in July from US$32.4 billion in June.
Net buying of long-term equities, notes and bonds totaled US$67 billion during the month, up from net purchases of US$9.3 billion in June, the US Treasury Department said yesterday in Washington.
"The data suggest that European private investors used Treasuries and agencies to protect against deterioration in the euro financial markets in July," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. "That trend will likely continue into August's data."
US assets have maintained their attraction as Spanish banks are hemorrhaging deposits and European leaders are still squabbling over the next steps needed to overcome the sovereign debt crisis. A European Union finance ministers meeting in the Cypriot capital of Nicosia last Friday deadlocked over the timetable for a more unified EU banking sector.
Including short-term securities such as stock swaps, foreigners bought a net US$73.7 billion in July, up from net buying of US$15.1 billion in June.
Spain's financial industry is already backstopped by Europe to the tune of 100 billion euros (US$131 billion), and is reliant on 412 billion euros of gross borrowings from the ECB. Shrinking deposits are undermining the ability of banks to support economic growth even as the government debates whether to seek a bailout.
China remained the biggest foreign owner of US Treasuries in July after its holdings rose US$2.6 billion to US$1.15 trillion, according to the Treasury.
France lifted its holdings of Treasuries by 32 percent to US$64.8 billion, and the UK raised theirs to US$140.9 billion from US$137.8 billion. Switzerland's holdings rose 10.7 percent to US$190.1 billion.
International net purchases of US Treasuries rose to US$50 billion in July from US$32.4 billion in June.
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