Foreign Bond Investment

One archived past release showed monthly net TIC inflow of $107.5 billion, split between private inflows of $81.4 billion and official inflows of $26.1 billion. Foreigners bought $131.6 billion of long-term United States securities, while United States residents bought $35.4 billion of foreign securities. The offsetting outflow left adjusted overall net of $96.1 billion.

Within Treasury bonds and notes, private buyers added $16.2 billion while official sellers sold $6.4 billion. Treasury bills, meaning debt under 1 year, added $6.2 billion, custody liabilities fell $38.9 billion, and banks net liabilities rose $50.3 billion.

How is Foreign Bond Investment calculated?

1. Foreign viewpoint: A sale to a foreign resident counts as a foreign purchase, while a purchase from a foreign resident counts as a foreign sale.
2. Gross amounts at settlement: Purchase cost at trade completion includes buyer fees and taxes, while sale proceeds exclude charges, with no repricing during the month.
3. Currency conversion and netting: Payments in foreign money are converted to dollars at the spot rate. Net foreign buying for a class equals gross purchases minus gross sales.
4. Headline sum: It adds private and official net for Treasury bonds and notes in billions of dollars, with no seasonal adjustment. The private and official split carries a known transaction bias. Positive means inflow of money and negative means outflow.
5. Filing exemption: A firm must file when buying or sales reach 350 million dollars in a month. It then keeps filing for both buying and sales for the rest of that year.
6. Worked example: A French buyer pays $52 million for a $50 million note with $2 million in fees, logged as $52 million of buying. A French seller gets $98 million for a $100 million note after charges, so net is 52 minus 98, or negative $46 million.

Key point: Do not read country rows as true ownership, since securities held in another country are recorded against that account location. Also, foreign bonds means United States buying of foreign debt, the reverse flow.