International demand for long-term U.S. stocks, bonds and financial assets rose in November as private investors purchased a record amount of government securities, a Treasury Department report showed.
“The world is still not a safe place and U.S.-based assets have always stood the test of time during periods of great uncertainty,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The worldwide recession may be technically over, but global investors are not so sure.”
This is not about recession but rather confidence concerns - confidence in US securities, or USA, Inc. This is to say, confidence in the U.S. dollar. While demand for long-term U.S. securities rose in aggregate (Grand Net), the up tick remains within the context of down trend. Foreign purchases and sales of long-term domestic and foreign securities by type chart reveals that nearly all asset classes declined in terms of velocity and acceleration in November. The only exceptions were U.S. Treasury Bonds & Notes and Corporate Stocks.
The major foreign holders of treasury securities as a percentage of the total chart is even more revealing. China has quietly reduced their marginal purchases of US treasuries since the summer 2009. China is a major buyer of US treasuries, thus, any change is highly significant. For now, the United Kingdom, which in and of itself raises even more concerns, has absorbed the marginal supply.
Flow the money, not the talk!
FOREIGN PURCHASES AND SALES OF LONG-TERM DOMESTIC AND FOREIGN SECURITIES BY TYPE:
MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES As A % of TOTAL:
Source: bloomberg.com
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