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WASHINGTON (AP) -- Foreign demand for long-term U.S. financial assets fell in April as both China and Japan trimmed their holdings of Treasury securities.
The Treasury Department said Monday that net purchases of stocks, notes and bonds obtained by foreigners fell to $11.2 billion in April, from $55.4 billion in March.
China, the largest holder of U.S. Treasury securities, trimmed its holdings to $763.5 billion in April, from $767.9 billion in March. Japan, the second largest holder of Treasury securities, reduced its holdings to $685.9 billion, from $686.7 billion a month earlier.
Treasury Secretary Timothy Geithner traveled to Beijing earlier this month to assure the Chinese government that the Obama administration is determined to get control of an exploding U.S. budget deficit, which is projected to hit a record $1.84 trillion this year.
China's holdings of Treasury securities represent about 10 percent of America's publicly held debt.
The administration has said while its aggressive moves to fight the recession and a severe financial crisis will push up the budget deficit temporarily, it intends to reduce the deficit as soon as the economic situation permits.
With the government's borrowing needs soaring, there have been some concerns that foreign interest in holding U.S. debt might falter, causing interest rates to rise.
The administration contends that recent increases in the interest rates for U.S. Treasury securities were not a sign of investor unease but a reflection of improving economic conditions.
The Fed has been buying for a few months now. China announced they'd be buying less a while ago and is currently buying up raw commodities. Now Japan and Russia has just announced they'd be buying less Treasuries and going with the IMF bonds.
This is not news but is finally hitting the MSM. For a few months this has been buried in the FRB reports so it's been available. I guess the Fed is running low on how much they can buy at auctions. The increase in the rates point in that direction. It's the 10 year and beyond auctions you need to follow to see what foreign investors are doing or not doing.
This site is pretty good for following this and giving details in editorials after auctions when the FRB reports come out.
China wants to be a superpower, therefore they have every incentive to stop funding America's problems. The implosion of the United States has begun and China is sitting back and enjoying the show.
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