The boost in August capital flows to the U.S. appears to be driven by a stronger appetite for U.S. Treasury and agency debt. Also, Japan and the U.K. boosted their holdings of U.S. debt. Japan increased its holdings by $6.5 billion and the U.K. boosted its holdings by $5.9 billion. Still, some analysts say foreign demand for U.S. securities needs to be much stronger in order to offset downward pressure on the dollar. – WSJ4

UPDATE: The above was added mid-Friday.  Looking beyond August, you’ll note from the following charts that the strong foreign demand they’re talking about doesn’t seem to have materialized in the last couple of months, at least from official sources, except for the anomaly in the week Sept 10-16.

The Fed’s own MBS holdings leaped by $70.699 billion, but other than a return to billion dollar a day support for America’s debt markets, this week’s episode isn’t all that exciting. Funny the foreign central banks would choose to dip their toes into debt again while the Dow was on a tear.

This week’s Reuters report1 documented a modest but healthy buy of treasuries, and a second consecutive positive sub-billion rise in agencies. The report was, as usual, based on the weekly update from the NY Fed’s H.4.1 table site.2 Here is Doom’s updated CSV version3 of the agencies and treasuries foreign central bank holdings data set.


The treasuries buy recovered this week, adding $7.148 billion after last week’s sub-billion selloff.


Agencies improved on last week’s even smaller result, nudging up $0.976 billion.

The net change of US obligations was a healthy $8.124 billion. That’s the first week in three to yield a significant increase.


Twist’s ratios graphs slipped slightly down.

Heavy convergence in both elements of the Setser 52-week continues as the anniversary window lies in the heart of last year’s insanity.

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Notes and References

[1]: "Foreign c.banks US debt holdings up in week – Fed", Reuters, October 15, 2009.

[2]: "H.4.1 Factors Affecting Reserve Balances", Federal Reserve Statistical Release (weekly), Federal Reserve Bank of New York.

[3]: The updated data set as a Comma Separated Value (CSV) file is here.

[4]: "Foreign Demand For US Secs Up,But May Not Support Dlr", by Maya Jackson Randall, Wall Street Journal, October 16, 2009.