WASHINGTON (MarketWatch) -- Monthly capital flows to the U.S. including short-term securities like Treasury bills rose to $105.9 billion in May, up from a revised $97.8 billion in April, the Treasury Department reported Tuesday.
Net foreign purchases of long-term U.S. securities, meanwhile, climbed to $163.5 billion from $97.4 billion, the highest amount since August 2006.
Private foreign investors bought $152 billion in securities, making up most of the increase in net foreign purchases of long-term U.S. securities.
"The robust pick-up in net purchases of U.S. long-term securities in April and May indicates that there will be no problem funding the current account deficit in the second quarter," said Brian Bethune, U.S. economist for Global Insight. That deficit is projected to be about $196.0 billion.
Net long-term inflows in the first two months of the quarter were more than enough to cover the projected deficit, Bethune wrote in an e-mail.
Private purchases of Treasury bonds and notes rebounded in May, with investors buying $26.2 billion in bonds and notes. Private investors also more than doubled their purchases of corporate bonds, buying $68.6 billion in corporate debt versus the $30.6 billion bought in April.
Meanwhile, official institutions like central banks sold Treasury bonds and notes in May, unloading $4.6 billion in Treasurys. They bought $4 billion in corporate bonds, up from $2.9 billion in April, and bought $12.8 billion in government agency bonds. It was down from $13.7 billion in April.
Chinese holdings of Treasury securities fell for the second straight month, to $407.4 billion from $414 billion in April.
Meanwhile, the Labor Department reported that wholesale prices fell 0.2% in June as food and energy prices declined after four months of hefty increases. See full story. In a separate report, the Federal Reserve reported that U.S. industrial production rose by 0.5% in June and that capacity utilization climbed to 81.7% from 81.4%. See full story. |
