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Greg Michalowski

Net Long-Term TIC Flow Shows Capital Flows Out Of US

By Greg Michalowski on January 16, 2009 | More Posts By Greg Michalowski | Forex News By FXDD

The Net Long Term TIC FLow data for November showed a decline of 56.8 billion in November.  This says that foreigners lessened their demand for US financial assets. To put things in perspective, this is the second time since 2000. The last time was in August of 2007 when the US Credit Crisis started in earnest. The decline was attributed to falling demand for US long term financial assets.  The worry is foreigners will be reluctant to purchase US longer term securities as a result of worries about mounting deficits and future inflation.   This would force up rates and should also pressure the US dollar.

The problem with the release is it is for November.  The flows of today are more important for the relative strength or weakness of the dollar due to demand.  However, if a trend can be shown (i.e. a few months of declines), then something is amiss with the flows.

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