TIC (Treasury International Capital) Data for May 09

The U.S. Treasury department released the TIC data for the month of May. It is now 2 consecutive months that saw the net decrease in purchase by foreign buyers.

Treasury International Capital (TIC) Data for May
(7/16/09, U.S. Treasury Department)

"Net foreign purchases of long-term securities were negative $19.8 billion.

"Net foreign purchases of long-term U.S. securities were $7.9 billion. Of this, net purchases by private foreign investors were $31.3 billion, and net purchases by foreign official institutions were negative $23.4 billion.

(Negative purchase means they sold it, in case you are confused.)

"Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities increased $9.8 billion. Foreign holdings of Treasury bills increased $53.1 billion."

So foreigners are dumping the long-term securities and picking up short-term Treasury bills. That's not an ideal situation for the U.S., as it has to depend on short-term financing for its operation.

In conclusion:

"Monthly net TIC flows were negative $66.6 billion. Of this, net foreign private flows were negative $82.2 billion, and net foreign official flows were $15.6 billion."

Among top 10 foreign holders of U.S. Treasuries (data from Treasury Dept),

• Japan trimmed the holding by $8 billion;
• Caribbean Banking Centers trimmed by $10 billion;
• Russia trimmed by $13 billion; and
• Taiwan trimmed by $3 billion.

One glaring exception in the data is China. It INCREASED the Treasury holding by $38 billion.

Below is the monthly TIC flows since January 2009 (in billion dollars):

• January: -144
• February: -88.2
• March: 27.1
• April: -38.0
• May: -66.6

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