Foreigners increased purchases of long-dated US securities, including government bonds, in March, the US Treasury said on Tuesday, but lightened up on short-term assets such as bills. Overseas investors bought a net $36.19 billion in long-term assets in March, above February's inflow of $10.14 billion. They increased Treasury holdings by $20.47 billion after buying a net $15.35 billion the prior month.
China, the largest foreign US creditor increased its Treasury holdings to $1.170 trillion from a downwardly adjusted total of $1.155 trillion in February. Brazil increased its holdings by $9 billion to $237.4 billion. "We are struck by the buying form Brazil, which we suspect is about intervention," said David Ader, head of government bond strategy at CRT Capital in Stamford, Connecticut.
Both Brazil and China regularly buy dollars in currency markets to prevent excessive appreciation of their own currencies and stash the money in US government bonds. Private overseas investors were actually net sellers of Treasuries in March, though they did snap up $2.25 billion of US corporate debt. Official institutions such as central banks were modest net sellers of corporate debt to the tune of $425 million. Including short-dated assets such as bills, however, foreigners unloaded $49.99 billion overall after having snapped up $92.65 billion in February, down from an initial estimate of $107.67 billion. March's net outflow was the biggest since July.