Talking Points:
- Total Net TIC Flows -$42.8 Bln in December versus $30.2 Bln in November
- Foreign net long-term outflows of portfolio securities -$12.9 Bln in December
- China cuts Treasury holdings by 15% in 2016, Japan reduces its exposure 2.8%
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Despite a TIC report showing global selling of US benchmark assets through December, the US Dollar offered a restrained response through Wednesday evening. This resultant net outflow from the country does not break any records, but it does come amid the transition of the government following the November election of President Donald Trump. While many of his policies were only campaign platform at that time and former President Barack Obama had yet to step down, this global measure does offer insight on global confidence in the country’s bearings.
Total net TIC (Treasury International Capital) flows crossed the wires with a $42.8 Bln sale of US assets in December versus a $30.2 Bln aggregate purchase recorded the previous month. Long-term US security holdings showed an outflow of $12.9 Bln in December versus a $34.4 Bln inflow previously. A historically, this is a volatility measure from month-to-month, so these updates offer limited insight on significant change. However, over a longer period, the data looks more remarkable. Net foreign Treasury holdings through the end of 2016 dropped to $6.004 Tln compared to $6.146 Tln a year ago – a 2.3 percent decline.
Looking at a few key individual holdings, China’s holding of US Treasuries – until recently the largest holder – suffered their largest drop the most on record in 2016, falling from $1.25 Tln to $1.06 Tln over the year. Meanwhile, despite a decrease in Japan’s Treasury holdings of -$17.8 Bln to $1.09 Tln in December, the island country would become the United States’ government’s largest creditor.
Chart complied in Tradingview
