Foreign Holdings Of US Securities Surge In July, China Again Buyer Of Treasuries As Japan Closes In On Second Place
Today's TIC data came in showing a surprising and robust inflow of foreign capital into the US in the month of July, with a net inflow of $61.2 billion on expectations of $47.5 billion, and a solid jump from last month's $44.4 billion. On a gross basis, purchases of a total of $74.8 billion in US securities consisted of $30 billion in Treasurys, and $17.3 billion in Agencies, but more surprisingly $13.9 billion in Corporate Bonds and $12.5 billion in Corporate Stocks. The last two categories were outliers consider the prior two months had seen outflows in foreign holdings of both bonds and stocks (a total of $27 billion across the two categories for both months). What may or may not come as much of a surprise is that of the $74.8 billion in total Long-Term investments, pretty much all of it came from capital originating in Japan ($29.7 billion) and the UK ($30.9 billion). Ah, good old UK, which as a covert depot for central bank operations, is now no longer content with accumulating Treasurys at a torrid pace, now holding a total of $374.3 billion (a $12 billion increase M/M), but is also aggressively bidding up bonds and stocks. In July the UK (which itself can barely fund its own QE-prompted deficit funding), also bought $12.4 billion in corporate bonds and $2 billion in corporate stocks.
Chart showing gross flows by product category on a monthly basis:
Tracking flows in and out of corporate stocks: July saw over $10 billion in inflows into US stocks, offsetting the surge of the endless domestic equity redemptions which as everyone knows, is confirmation that Americans have largely said enough to the lie that is the US stock market. It appears dumber foreigners will need some time fo learn the same lesson.
Total holdings for China show that after dumping a lot of USTs in June, China once again tentatively bought $3 billion, bringing its total to $846.7 billion.
Yet the most important players in July were Japan and, of course, the mythical buyers that continue to operate out of the UK.
Change in Japan holdings, which now at $821 billion are just $25 billion away from China's total, and on track to making Japan the second largest foreign holder of US Bonds.
And, last, the pandemonium which is the UK. The blatant accumulation of bonds using UK proxies is just getting ridiculous.