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Global Investors Flock To Us Debt At Record Speed

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Investors concerned about debt problems in the eurozone and China's continuing growth potential flocked to the safety of the US in their droves in March, snapping up a record net $140.5bn (£97bn) of long-term debt.

The net increase was almost a $100bn rise on February – when foreign purchases of long-term securities stood at $47.1bn – and was a new record, according to US ­Treasury figures.

The marked increase in securities purchases – which saw China become a net-buyer of US assets for the first time in six months – is evidence that the rest of the world ­continues to view the US as a relative safe haven.

New data from the US Treasury show that private purchasers led the increase, buying $125bn of US bonds and other assets in March, while foreign governments bought $32.7bn worth.

Although the bulk of the capital inflows were focused on US Treasuries – known in the UK as gilts – corporate and other forms of long-dated debt were also popular.

Private investors increased their holdings of Treasury bonds and notes by $33.2bn, while overseas governments snapped up $27.1bn of US Treasuries.

China, Japan and the UK – the three largest holders of US Treasuries – all increased their holdings. China increased its Treasuries position by 2pc to $895.2bn, with total foreign holdings of Treasuries up 3.5pc to $3.88 trillion.

Win Thin, senior currency strategist at Brown Brothers Harriman, said he expected investors to continue to favour dollar-denominated assets. "Given the debt crisis that Europe is struggling with, flight to safety will most likely favour the United States in quarter two," he said.

Gregory Daco, economist at HIS Global Insight, said the investment trends were clear evidence of trust in the US. "As the sovereign debt crisis in Greece intensified in March, foreign investors mostly sought refuge in the safe-haven US Treasury bonds and notes," he said.

"Nonetheless, government agency securities and corporate debt provided very attractive alternatives for investment – an encouraging sign that investors have faith in the US recovery."


Meanwhile the Federal Reserve Bank of San Francisco predicted the US will continue to grow at a faster pace than previously thought, projecting a growth rate of 4pc this year, compared with the 3.7pc growth rate witnessed since the recession ended last June.

Thank god the US isn't facing it's own debt crisis.

Still at least it's high quality debt in a currency that's not being debased.

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  • 439 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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