Posted by Joseph Y. Calhoun, III

TIC flows were positive in August:

The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for August 2009. The next release, which will report on data for September 2009, is scheduled for November 17, 2009.

Net foreign purchases of long-term securities were $28.6 billion.

• Net foreign purchases of long-term U.S. securities were $32.9 billion. Of this, net purchases by private foreign investors were $21.3 billion, and net purchases by foreign official institutions were $11.6 billion.
• U.S. residents purchased a net $4.3 billion of long-term foreign securities.

Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $13.0 billion.

Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities decreased $18.5 billion. Foreign holdings of Treasury bills decreased $2.5 billion.

Banks’ own net dollar-denominated liabilities to foreign residents increased $15.7 billion.

Monthly net TIC flows were $10.2 billion. Of this, net foreign private flows were $14.9 billion, and net foreign official flows were negative $4.7 billion.

That’s the first positive flow in three months and is a mild positive for the US dollar. Flows are still negative for the year by $40.3 billion. For the year private investors have shown a net outflow of $137.9 billion while official (primarily central banks) flows are a positive $97.6 billion.

While I’m not positive on the dollar over the long term, it is possible that the rally in US assets will bring back some private flows as it did in August. If that happens for a few months, it might be enough to stabilize the dollar.