The $167.7 billion net inflow of international capital into the United States in February mainly reflects increased foreign appetite for U.S. Treasury securities.
Foreign Private Investors Buying Treasuries Again
- As financial markets observed the widely-expected approach of Fed tapering during the middle part of 2013, foreign private investors eschewed Treasuries. That trend is reversing as evidenced by the $75.9 billion net monthly inflow into Treasuries from private foreign investors, the largest onemonth surge since 2011. The increase lifted net long-term flows into the United States to $85.7 billion.
Foreign Official Purchases Increased Too
- Foreign official purchases of Treasuries also increased a net $16.6 billion, a nearly perfect reversal of last month’s outflow. Taking all international capital flows into consideration, the net result was a monthly surge of $167.7 billion into the U.S., the second strongest monthly inflow since the recession ended.
- Meanwhile, U.S. purchases of foreign securities are still waning, though the February outflow was much smaller than January’s.
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