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Demand Stays High for U.S. Assets

Foreigners plow a net $102 billion into Treasuries, stocks and other securities.
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The U.S. remains the destination of choice for worldwide capital.

According to Treasury Department data released Wednesday, foreigners added a record $101.9 billion to their net investment in U.S. assets in September, helped by inflows into corporate stocks and bonds. In August, foreign holdings rose by a net $89 billion.

Overall, total purchases of U.S. securities were $1.66 trillion during September, compared with total sales of $1.54 trillion.

Treasury purchases by international investors were a net $21.8 billion. Purchases of shares in U.S. companies were $24.6 billion, on a net basis, while purchases of bonds were a net $51.5 billion.

The report showed that investors in Caribbean banking centers, which normally include hedge funds and other speculators, were net sellers of about $362 million of securities last month. Meanwhile, Japan was a net $2.7 billion buyer and China was a net $4.2 billion buyer.

The data are followed closely as investors, particularly bond and currency traders, worry that foreigners will lose their taste for U.S. assets. Such a migration of capital would have negative implications for U.S. interest rates since the inflow of money into U.S. securities helps finance the current account deficit.

Last week, the government said the U.S. trade deficit widened to a record $66.11 billion in September as natural gas imports rose and sales of capital equipment overseas fell sharply. The deficit, which measures the difference between goods imported to the U.S. and goods sold abroad, swelled 11% from August, when it stood at $59.35 billion, according to revised Commerce Department figures.