Why Foreign Investors Flock To Safety Of Treasury Bills, ETFs
By Tom Lydon on December 24, 2008 | More Posts By Tom Lydon | Author's Website
It is not just American investors seeking safety in short-term Treasury bills and related exchange traded funds (ETFs); foreign investors are throwing cash into U.S. securities in record volume. However, where the money is going specifically is telling.
Foreign investors are pulling money out - a calculated $50 billion in October - of higher-yielding bonds issued by government supported-entities Fannie Mae and Freddie Mac, which shows lingering doubt about the government’s sway in the recently hard-hit lenders, writes Floyd Norris for The New York Times. Over 12 months through October, foreigners only invested $65 billion into Fannie Mae and Freddie Mac, a low unrivaled since last seen in 1998.
The “implicit” government guarantee behind the agencies did not mollify doubt in foreign investors as shown in July and August were there was a net $64 billion of such securities. What may have mattered to overseas investors was a full backing behind the bonds after government nationalized the lenders.
In October, almost $91 billion came into Treasuries, a record high compared to all previous months. A good $56 billion worth of that money went into Treasury bills instead of longer-dated bonds and notes which drove interest rates on bills to historic lows and even into negative territory.
Current foreign investment into Treasuries may reach over half a trillion dollars a year.
S&P 500 Index Is Still Overvalued
This Small Oil Exploration Company Is Ripe For A Takeover… Here’s How To Profit
Obama Commits To Free Trade Agreement With South Korea, But Auto Trade Remains An Obstacle
Exponential Growth, Finite World
Forex Wrap-up: A Massive Short-Covering Rally In The US Dollar May Just Be Starting
Bay Street Stocks Slip Slightly Again - Canadian Commentary - 1 day ago
Stocks Close Mostly Lower Amid Disappointing Quarterly Results - U.S. Commentary - 1 day ago
Bay Street Stocks Linger Slightly Below Unchanged Level - Canadian Commentary - 1 day ago
Stocks Remain Stuck In The Red In Mid-Afternoon Trading - U.S Commentary - 1 day ago
European Markets Fall, Led By Banks, Oils - European Commentary - 1 day ago


