US TIC data

US TIC data for August show that net flows into long term securities remained very strong.  The total net portfolio inflow to the US was $91.3bn in August.  This was up from $87.5bn in July and the largest figure since $92.0bn in April 2004.  The inflow was larger than the figures of $55bn that had been expected and is easily sufficient to finance the US current account shortfall. The breakdown of the data reveals that there was a sharp increase in foreign purchase of US corporate bonds.  Foreigners bought a net $40.3bn of US corporate bonds in August against $24.9bn in July.  Foreign net purchase of US agency bonds slipped to $15.7bn from 37.8bn in July. Foreign purchase of US equities remains modest, at $3.8bn in August compared to $10.0bn the previous month.  Though US accounts continue to move money into overseas equities ($13.5bn this August compared to $8.7bn in July), this is clearly only putting a small dent in the continue huge appetite for US bonds from overseas.