Bond Market, Always Nervous, Now Has A New TIC
...ains that what’s going on in Asia and elsewhere overseas is important because, as United States budgets and trade deficits have grown, foreign purchases of United States debt securities have allowed U.S. consumers and the federal government to continue borrowing cheaply. If foreign investors cut back, interest rates could rise while the United States government tries to attract more buyers for its debt. United States investors increased their purchases of foreign securities, pushing the dollar down against other major monies as traders worried about the money pouring out of the United States. As of the date of this article, the good news for bond investors in the TIC report was renewed enthusiasm for Treasury bonds and notes from foreign investors. Foreign central banks and other official sources bought a net $14.8 billion of Treasury bonds and notes in October. This was up 51% from September. After these figures were released, the dollar dropped against the euro and the yen. Traders were focused on the headline figure—the net flows into the U.S., after subtracting U.S. investment abroad—declining to $48.1 billion from $67.5 billion the previous month. The Treasury International Capital report is now getting more attention because large purchases of United States bonds by foreign investors are a key reason that interest rates stayed low t...