Net Foreign Security Purchases (TIC) – United States

      •    Measures Capital Flow into U.S. Denominated Assets FX Traders Want TIC Data To Meet Trade Deficit Needs

        Watch Trend of Purchases By Foreign Central Banks

        Summarizes the flow of stocks, bonds, and money market funds to and from the United States . The headline figure is the difference in value between American purchases of foreign securities and foreign purchases of American securities, expressed in millions of dollars.  The Treasury International Capital or TIC statement is a major component of the American capital account and gives valuable insight into foreign demand for American investments and dollar.

 

A positive figure indicates that more capital is entering the US than leaving as sales of American securities to foreigners exceed American purchases of foreign securities. Such positive figures suggest that American security markets are competitive with those of other countries. Foreign security purchases are especially important in the case of a trade deficit, as a positive figure can offset the depreciating effect of a trade shortfall. On the contrary, a negative or declining TICS figure reflects a declining capital flow picture. Outflows are indicative of weaker demand for US assets which puts downward pressure on the value of the dollar.

A key feature of the TIC data is its measurement of the types of investors the dollar has; governments and private investors. Usually, a strong government holding of dollar denominated assets signals growing dollar optimism as it shows that governments are confident in the stability of the U.S. dollar. Most importantly seems to be the purchases of Asian central banks such as that of Japan and China. Waning demand by these two behemoth US Treasury holders could be bearish for the US dollar. As for absolute amount of foreign purchases, the market generally likes to see purchases be much stronger than the funding needs of that same month’s trade deficit. If it is not, it signals that there is not enough dollars coming in to match dollar going out of the country. As a side note, purchases by Caribbean central banks are generally seen to be less consistent since most hedge funds are incorporated in the Caribbean. Hedge funds generally have a much shorter attention span than other investors.

Relevance: Tends to move markets on release
Release Schedule: 9:00 AM (EST); monthly, in the second month following the reporting month
Revisions Schedule: Data are subject to revisions for 24 months following release
Source of Report: U.S. Treasury
Web Address: http://www.treasury.gov
Address of Release: http://www.treasury.gov/tic/ticsec2.html
:Refer to “Part B” (mid way down) > Net Purchases of Foreign Long-term Securities by Type of Security > Refer to “TIC Press Releases” (right margin) > Click on the most recent release within the US Treasury Press Room.
AKA: U.S. Transactions with Foreigners in Long-term Securities, Treasury International Capital, TIC or TICS

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