Foreigners Buy U.S. Assets at Fastest Pace Since 2003
March 15 (Bloomberg)—International investors accumulated U.S. assets in January at the fastest pace in almost two years, signaling that record current-account and budget deficits haven’t soured foreigners on putting their money into the world’s largest economy.
Investors bought a net 60.7 billion in December, the Treasury Department said today in Washington. The total was the second highest behind the 59 billion, based on a Bloomberg News survey of five economists.
The biggest net increases were in holdings of Treasury securities and government agency bonds. The yield on the benchmark 10-year Treasury note fell 9 basis points, or 0.09 percentage point, in January to 4.13 percent. Today’s figure compares with a monthly average of about $58 billion over the last three years.
Data such as this should be the death knell for Gold as it should knock back other currencies trading against the USD – and so far this is bearing out. True, Gold is well off highs set before this mornings big surprise in international treasuring investment news; true, foreign (to US) currencies have lost gains made earlier in the day on weaker than expected US retail data; but all told, the moves have not been overly dramatic given the nature of the TIC data surprise.
EURUSD – initial reaction following TIC data.
EURUSD pulling back to first support.
USDCAD – breaks bear flag and currently reversing – tomorrow a buy setup will be in place above today’s range, the Failed Bearflag Trigger.
Lets revisit this once the news has been fully digested by world-wide investors.
Gold
Gold – 445 is near term resistance and had made the attempt once today to break above, the attempt dashed by the TIC data and currency moves once released. New positions stopped in today need to be monitored very carefully; those managing existing profitable positions may wish to wait for tomorrow before moving stops up more aggressively. Its interesting that Gold has not sold off more strongly following the currency news and moves, although the day is young.
Perhaps contributing to a slight disconnect in the traditionally inverse relationship between Gold and the US Dollar is speculation that raw demand for Gold may be much higher than anticipated, due in no small part to new ETF offerings:
Gold-linked funds fuel hunger for bullion
The World Gold Council spent three years developing a new security that would pump up gold demand by giving investors the opportunity to buy bullion that trades on the New York Stock Exchange, with the price of the security based on the price of a 10th of an ounce of gold.
The securities have now created demand for more than $2-billion (U.S.) of gold bullion.
The StreetTRACKS Gold Trust was launched on the NYSE in November, along with Gold Bullion Securities on British and Australian exchanges. It was the first exchange traded fund linked to the price of a commodity. Other such funds have tracked stock indices.
“To be successful, we felt the ETF had to attract $1-billion worth of investment within a year. It attracted that support within three days,” said James Burton, chief executive officer at the World Gold Council.
In an interview in Toronto last week, Mr. Burton said: “There are estimates within our organization that this ETF may eventually reach 30-billion in size.”
The ETFs represent new demand for what mining companies produce, as each time one of these securities is sold, the fund’s backers set aside bullion in a bank vault. Just a few months after their launch, these new ETFs already account for 7 per cent of world gold production.
05.03.15 11:33 #