Investors and institutions across the world repatriated funds in November, leading to a net outflow of $21.7 billion in long-term U.S. securities. Foreign accounts sold a net $56.0 billion of U.S. assets in the month while U.S. accounts sold a net $34.3 billion of foreign assets. Of the $56.0 billion in foreign outflow, official institutions sold a net $37.1 billion of U.S. assets with private investors selling $18.9 billion. Foreigners were once again heavy sellers of U.S. agency debt and were also heavy sellers in November of corporate bonds. But they were net buyers of U.S. equities, a category that shows an inflow of $4.1 billion. Foreigners also continued to buy short-term U.S. securities and when including this category, total net flows rose $56.8 billion in November, a solid gain but well short of the $260.6 billion total net inflow during the market panic of October.
There is good news in this report as China continued to expand its holding of U.S. Treasuries, up nearly $30 billion in November. Chinese holdings are at $681.9 billion with Japanese holdings, which slipped slightly in the month, at $577.1 billion. There was little immediate reaction to November's report which is mixed. Further repatriation is likely in December and perhaps this month as well though continued strong Treasury demand from China is definitely a positive.
