A Worrisome Gap!

From FXStreet.com, U.S. Dec. capital flows decline to $56.6 billion

Capital flows into the United States fell to $56.6 billion in December after hitting a revised $91.6 billion in November, the Treasury Department said Wednesday. The decline was led by a drop in private investors’ purchases of Treasury bonds and notes. Investors purchased $12.7 billion of Treasuries in December versus $50.8 billion in November. Official institutions bought $5.6 billion of Treasury bonds and notes in December, up from $3.7 billion in November. Net foreign purchases of long-term domestic securities were $74.2 billion. U.S. investors increased their purchases of foreign-issued securities in December, buying $17.6 billion in foreign bonds and equities, the Treasury said. (Emphasis added)

In separate news, Reuters reported on Feb 10th,

the US Trade deficit for December, 2005 was $65.68 billion, slightly higher than economists’ median forecast for $65.0 billion and up from November’s $64.69 billion.

I don’t recall the gap ($9 Billion) to have ever been this large. To cover our trade deficit we need to import over $2 Billion per day and in December we did not do it. In addition, there was a dramatic drop in investors purchases of treasuries in Decemember. This certainly bears watching!

Capital flows Trade deficitMover Mike

Update: I was wrong about this gap being the biggest. Dan Norcini at JSMineset has this chart showing Balance of Trade vs Net Capital Flows


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