Monday, June 16, 2008

Foreigners buy Treasuries and Agencies in April TIC data show

Foreign investors bought $80 billion of long-term Treasuries in April, according to TIC data released today. China bought $31.5b of long-term debt, while reducing its short-term holdings by $2.7b. That works out to $28.8b in net purchases. Brad Setser in his excellent blog argues:

The funny thing is that this almost certainly understates China’s true purchases of US debt. In the past few years, about ½ of the Treasuries purchased by the UK have been reallocated to China in the annual survey (see the June revisions to this series). We know that China’s reserves increased by about $80 billion (after adjusting for valuation gains) in April, so it is realistic to think that China’s true purchases of US assets were closer to $60 billion than $30 billion.

This excellent chart comes from Brad Setser's Blog

Noooo flight from US$ denominated assets just yet!

source: The April TIC data lends itself to a host of different headlines …
Brad Setser's Blog: Follow the Money

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