Global Demand for U.S.

Assets Increased in November

By Rebecca Christie and Vincent Del Giudice - Jan 18, 2011 10:40 PM GMT+0800

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Global demand for U.S. stocks, bonds and other financial assets rose in November from a month earlier as purchases from private investors offset a record level of sales from foreign government buyers, the Treasury Department reported. Net buying of long-term equities, notes and bonds totaled $85.1 billion during the month, the highest since August, compared with net buying of $28.9 billion in October, according to data released today in Washington. Including short-term securities such as stock swaps, foreigners purchased a net $39 billion compared with net buying of $15.1 billion the previous month. Turbulence in the European bond market has steered investors to the stability of U.S. Treasury securities. Moreover, the U.S. economy is recovering from the deepest recession since the 1930s, fueling a rebound in corporate profits. The European debt crisis was back on the radar of global bond market investors in November, and the U.S. likely was the favorite safe haven, said Chris Rupkey, chief financial economist at Bank of Tokyo-UFJ in New York in an e-mail before todays report. Official foreign investors posted net sales of $40.8 billion, which the Treasury Department said exceeded the previous record of $38.7 billion set in May 2010. Private investors posted net purchases of $79.8 billion. International Purchases The Treasurys reporting on long-term securities captures international purchases of government notes and bonds, stocks, corporate debt and securities issued by U.S. agencies such as Fannie Mae and Freddie Mac, which buy home mortgages. Before todays report was issued by the Treasury, economists in a Bloomberg News survey projected long-term U.S. financial assets would show net purchases $40 billion.

China, the biggest foreign holder of U.S. Treasuries, saw its portfolio fall by $11.2 billion to $895.6 billion in November. Hu Jintao, the Chinese president, meets officials in Washington this week. Wus state visit is aimed in part at diversifying an investment portfolio. Japan, the second-largest holder, increased its holdings by $2.2 billion to $877.2 billion in November. The United Kingdom increased its holdings by $33.3 billion to $511.8 billion in November, and Hong Kong, counted separately from China, reduced its holdings by $300 million to $138.9 billion. Total foreign purchases of Treasury notes and bonds were $61.7 billion in November compared with purchases of $24.7 billion in October. Foreign demand for U.S. agency debt from companies such as Fannie Mae and Freddie Mac registered net buying of $14.2 billion in November, about the same as in October. Net foreign purchases of equities were $13.3 billion in November after net purchases of $16.0 billion in October. Investors purchased a net $4.7 billion in U.S. corporate debt in November after buying $1.1 billion in October. To contact the reporters on this story:] Rebecca Christie in Washington atrchristie4@bloomberg.net; Vincent Del Giudice in Washington at Orvdelgiudice@bloomberg.net