Foreign interest in U.S. assets wanes
International demand for U.S. financial assets grew more slowly in April as China, Japan and Russia trimmed holdings of U.S. Treasury securities, a shift that may reinforce concern that demand for American debt will wane amid record deficits, Bloomberg reported.
Total net purchases of long-term equities, notes and bonds rose a net $11.2 billion, compared with $55.4 billion in March, the U.S. Treasury Department said today in Washington. International holdings of Treasury securities increased a net $41.9 billion, compared with the $55.3 billion gain in March. Including Treasury bills, the holdings fell a net $2.6 billion.
Chinese, Brazilian and Russian officials have expressed an interest in developing an alternative to the dollar as the world’s main reserve currency. Treasury securities have tumbled since March in part because of worries about ballooning federal deficits, Federal Reserve Chairman Ben Bernanke said.
Including short-term securities such as stock swaps, foreigners sold a net $53.2 billion of U.S. financial assets, compared with net purchases of $25 billion the previous month.
Analysts had anticipated international net purchases of long-term U.S. assets of $60 billion, according to the median of nine estimates in a Bloomberg News survey.
The Treasury Department’s reporting on long-term securities captures international purchases of government notes and bonds, stocks, corporate debt and securities issued by U.S. agencies such as Fannie Mae and Freddie Mac, which buy home mortgages.