By Steven C. Johnson
NEW YORK Feb 15 Foreigners continued to pour
into long-term U.S. assets as 2012 wound down, with demand
rising for both government bonds and equities, the U.S. Treasury
said on Friday.
Overseas investors bought $64.2 billion of long-term U.S.
securities in December, the most in four months, after
buying$52.4 billion the prior month.
"These are reassuring numbers, as people are buying both
Treasuries and equities," said Gennadiy Goldberg, a U.S. rates
strategist at TD Securities in New York. "It seems demand for
U.S. investment products knows no bounds at this point."
U.S. Treasury purchases rose to $29.9 billion from $26.4
billion. Private investors were the most active buyers, though
China, the largest foreign U.S. creditor, also added $19.7
billion in Treasuries, raising its stash to $1.203 trillion.
Foreigners' U.S. equity purchases totaled $25.9 billion,
compared with $21.5 billion in November.
The demand for stocks corresponds with a recent rally in the
benchmark S&P 500 index, which hit a five-year high early in
2013. Goldberg said forthcoming data for January is expected to
show continued robust demand for U.S. stocks.
Aggressive monetary stimulus from major central banks and
record low interest rates helped boost stock prices.
Treasuries, on the other hand, have lost ground since
December, with benchmark 10-year yields rising over 2 percent
this year from about 1.60 percent in late November.
That may mean reduced inflows in January's data, which will
be released next month, strategists said.
Already in December, investors from Caribbean banking
centers, a proxy for hedge funds, sold $13.5 billion of
Treasuries, according to the data.
Demand for bonds issued by the largest U.S. mortgage
financing agencies was also strong, with foreigners buying $18.1
billion in December compared with just $2.7 billion in November.
That was the best showing for agencies since August, when
demand was strong in anticipation of Federal Reserve plans to
buy such debt to lower long-term interest rates and boost
The Fed announced plans to buy $40 billion in mortgage-baked
bonds per month in September.
"Agency buying was especially strong. We attach some of this
to extended quantitative easing, but also perhaps window
dressing into year end," said David Ader, head of government
bond strategy at CRT Capital Group.
Including short-dated assets such as bills, overseas demand
totaled $25.2 billion in December, compared with an upwardly
revised $29.7 billion the prior month.