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Foreign Buying of U.S. Assets Plunges on Europe Optimism
International purchases of U.S. financial assets plunged 96 percent in September as confidence grew that Europe was beginning to solve its debt crisis and investors sold Treasuries following the Federal Reserve’s quantitative easing announcement.
Net buying of long-term equities, notes and bonds totaled $3.3 billion during the month, down from net purchases of $90.3 billion in August, the Treasury Department said today in Washington. Economists surveyed by Bloomberg projected net buying of $50 billion of long-term assets, according to the median estimate.
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ECB President Mario Draghi has called the euro “irreversible” and said the new government bond purchasing program will have effective conditionality attached. Photographer: Andrew Harrer/Bloomberg
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The Federal Open Market Committee said Sept. 13 that it would undertake a third round of quantitative easing by purchasing mortgage-backed securities at a pace of $40 billion per month until labor markets improve substantially.
“QE3 certainly played its role in basically encouraging people to take risk and to some extent to short the dollar,” Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York, said. “The risk appetite was pretty strong overall, there were better places to park your money than the dollar,” and “there was a big rise in optimism regarding the euro zone.”
Unlimited Buying
European Central Bank policy makers on Sept. 6 agreed to an unlimited sovereign bond buying program to wrest control of interest rates in the euro area and to stem the crisis in the region. ECB President Mario Draghi has called the euro “irreversible” and said the new government bond purchasing program will have effective conditionality attached.
Including short-term securities such as stock swaps, foreigners bought a net $4.7 billion in September, down from net purchases of $63.5 billion the previous month, the Treasury said.
China remained the biggest foreign owner of U.S. Treasuries in September after its holdings rose $300 million to $1.16 trillion, according to the Treasury.
Japan, the second-largest holder of U.S. Treasuries increased its holdings in September by $7.9 billion to $1.13 trillion, the highest on record, according to the Treasury.
Hong Kong, which is counted separately from China, decreased its holding by $6 billion to $135.7 billion.
Foreigners sold a net $17.3 billion of Treasuries in September, according to today’s report.
Estimates of foreign purchases of long-term U.S. assets in September ranged from net buying of $40 billion to $50 billion, according to five economists surveyed by Bloomberg before the report.
The Treasury Department’s data capture international purchases of government notes and bonds, stocks, corporate debt and securities issued by U.S. agencies.
Maybe the world has just had enough and dollar hegemony is going to blowup. I sure hope.
Hope and feding up are not forces that move history my friend.
Be sure and tell that to all the communist and socialist party members you meet.
Anyway dollar hegemony is ever so slowly being chipped away at and currency dominance by one country over another must be stopped.
A multipolar global currency hegemony is not ideal but given US dollar hegemony and the national murderous wars that collaborative system funds
and the oppression it creates outside in greater proportion than inside the imperial nation such a system must be destroyed.
I see no reason why one nations money should be worth more than anothers. That economic system should be abolished now, not later.
While this *is* news of historic importance, I think we knew that things were shifting EU-ways when the neoconservatives were finally given the boot in the U.S. The federal government's negligence over Hurricane Katrina illuminated the obsession with warmongering and a prescribed bunker mentality for all at home. While military conquest is good for the health of the state, especially the leading imperialist one, it couldn't be sustained by public opinion, and global financial attentions increasingly turned to Europe for assurances of a stable valuation -- the Euro.
The article only reports on yet-another round of liquidity injections into the Euro, not on any actual job growth figures or any other real indicators of a revitalized economy. While the dollar amounts involved are dramatic it is only a shift in confidence -- pop psychology manifested -- from one section of the bourgeoisie to another. There is absolutely no guarantee that the Euro will be any less volatile than the U.S. dollar, especially in an environment of competitive devaluations (debasings) of national currencies on the global export market gameboard.
