Summary
More scary numbers from our friends abroad!
_____
Early this afternoon, the Federal Reserve released its latest flow-of-funds data, current through 12/31/04. I am passing along tables containing the important foreign numbers with little comment, to get them into circulation as quickly as possible.
A discussion of these data will follow soon. As a "teaser," however, here is one incredible item the numbers reveal. During all of 2004, foreign net acquisition of US Treasuries equaled an astounding 102% of the Treasury's total net issuance of debt! Foreigners bought $371.1 billion, against total issuance of $363.6 billion.
In addition, for its own account, the Federal Reserve bought $51.2 of Treasuries. Thus, during 2004, foreign and Federal Reserve purchases totaled $422.3 billion -- 116% of the Treasury's total debt floatation. Do you think this might have had something to do with the tame behavior of Treasury yields during most of the year?
For all of 2004, foreign investors acquired a record net $1.19 trillion of US financial assets. This helped put the country into hock to foreigners by a whopping $5.17 trillion (foreign assets of $9.29 trillion, less liabilities of $4.12 trillion).
________
Table 1.
------------------------------------------
FOREIGNERS' U.S. FINANCIAL
ASSETS/LIABILITIES
(Billions of Dollars, Latest Data
Released 03/10/05 Through 12/31/04)
------------------------------------------
Total Total
Financial Financial
Assets Liabilities Difference
------------------------------------------
2004
12/31 9288.1 4116.0 5172.1
09/30 8907.5 4355.9 4551.6
06/30 8768.8 4238.5 4530.3
03/31 8609.5 4157.3 4452.2
------------------------------------------
As of
12/31
-----
2003 8193.7 4064.5 4129.2
2002 7441.1 3981.8 3459.3
2001 6965.8 3650.1 3315.7
2000 6584.9 3490.2 3094.7
=======================================
1990 1998.4 1388.8 609.6
---------------------------------------
1985 967.4 869.7 +97.7
1984 805.3 841.6 -36.3
---------------------------------------
1980 494.2 666.4 -172.2
1970 104.8 140.5 -35.7
1960 38.9 63.5 -24.6
1950 17.4 31.4 -14.0
=======================================
1945 16.3 14.9 1.4
------------------------------------------
Source: "Flow of Funds Accounts
of the United States" (Federal
Reserve "Z.1" release).
------------------------------------------
Table 2.
-----------------------------------------------
FOREIGN HOLDINGS OF US FINANCIAL ASSETS
AS OF 12/31/04 (Billions of Dollars
-- Latest Data Released 03/10/05)
-----------------------------------------------
% of
Total
Total US Financial Assets -----
Held by Foreign Investors 9288.1 100.0
===============================================
Credit-Market Instruments# 4573.5 49.3
------ ----
Open Market Paper 128.3
US Govt. Securities 2669.7
Treasury 1870.3
Agency 799.4
US Corporate Bonds 1775.5
-----------------------------------------------
US Corporate Equities 1906.1 20.5
------ ----
Credit-Market Instr.
+ Corp. Equities 6479.6 69.8
====== ====
-----------------------------------------------
Detail of US Government Securities
-----------------------------------------------
Treasury 1870.3
Official 1196.5
Private 673.8
Agency 799.4
Official 238.7
Private 560.7
------
2669.7
======
-----------------------------------------------
Source: "Flow of Funds Accounts of the United
States" (Federal Reserve "Z.1" release.) #For
the purpose of this analysis, the category
"Loans to US Corporate Business" has been ex-
cluded. As of 12/31/04, this category had tot-
al outstandings of $131.2 billion.
-----------------------------------------------
Table 3.
----------------------------------------
15 LARGEST FOREIGN HOLDERS OF U.S.
TREASURY DEBT AS OF 12/31/04, VS. THE
SAME COUNTRIES' HOLDINGS AS OF 09/30/04
(Amounts in Billions of $s)*
----------------------------------------
12/31 09/30
Country 2004 2004
----------------------------------------
( 1) Japan 711.8 719.2
( 2) Mainland China 193.8 180.4
( 3) United Kingdom 163.7 129.4
( 4) Caribbean Bank-
ing Centers@ 69.4 100.5
( 5) Korea 69.0 64.5
( 6) OPEC 59.8 55.0
( 7) Taiwan 58.8 57.5
( 8) Germany 53.6 51.3
( 9) Hong Kong 52.7 50.6
(10) Switzerland 51.1 49.1
(11) Canada 41.2 34.1
(12) Mexico 40.3 41.6
(13) Luxembourg 29.0 27.2
(14) Singapore 28.0 23.8
(15) Ireland 21.7 20.1
----------------------------------------
Total 1643.9 1604.3
----------------------------------------
*Estimated end-of-period foreign
holdings of US Treasury marketable
and nonmarketable bills, bonds and
notes based on Treasury Foreign
Portfolio Investment Survey bench-
marks and on monthly data reported
under the Treasury International
Capital (TIC) reporting system.
Totals comprise both official and
private holdings. Data subject to
revision. @Includes Bahamas, Ber-
muda, Cayman Islands, Netherlands
Antilles, and Panama.
----------------------------------------
Table 4.
-----------------------------------------------------
NET ACQUISITION OF U.S. FINANCIAL ASSETS
BY FOREIGN INVESTORS -- 2000 TO 2004
(Billions of Dollar)
-----------------------------------------------------
Years Ended December 31
----------------------------------
2000 2001 2002 2003 2004
----- ----- ----- ----- ------
Net Acquisition
of Finan. Assets 963.0 657.7 741.7 783.0 1190.1
================= ===== ===== ===== ===== ======
Credit-Market
Instruments
----------------
Open-Mkt. Paper 4.3 -2.6 10.3 9.9 20.6
Treasury Sec. -70.5 10.5 138.9 285.1 371.1
Agency Sec. 141.9 103.7 112.5 11.5 132.7
Corp. Bonds 168.4 195.4 151.0 232.6 275.9
----- ----- ----- ----- -----
Subtotal 244.1 307.0 412.7 539.1 800.3
----- ----- ----- ----- -----
Corp. Equities 193.6 121.5 54.2 36.9 33.2
----- ----- ----- ----- -----
Total 437.7 428.5 466.9 576.0 833.5
===== ===== ===== ===== =====
Above/Net Acquis. 45.5% 65.2% 62.9% 73.6% 70.0%
----- ----- ----- ----- -----
MEMO ITEM#
----------------
Loans to Corp-
orate Business -2.2 -1.6 10.1 -0.8 6.3
-----------------------------------------------------
DISTRIBUTION OF TREASURY/AGENCY ACQUISITIONS
-----------------------------------------------------
Treasury Securities
-----------------------------------------------------
Official -5.2 33.7 60.5 169.7 239.8
Private -65.3 -23.2 78.5 115.4 131.3
---- ---- ----- ----- -----
Total -70.5 10.5 139.0 285.1 371.1
-----------------------------------------------------
Agency Securities
-----------------------------------------------------
Official 40.9 20.9 28.6 24.9 50.4
Private 101.0 82.8 83.9 -13.4 82.3
----- ----- ----- ---- -----
Total 141.9 103.7 112.5 11.5 132.7
-----------------------------------------------------
*Source: "Flow of Funds Accounts of the United
States" (Federal Reserve "Z.1" release). #Al-
though "Loans to Corporate Business" are classi-
fied by the Fed as "Capital Market Instruments,"
they have been excluded for the purpose of this
examination, since they lack the liquidity of
the other categories.
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