Increased demand for dollar assets

Despite the worst year for the dollar since 2002, the US Treasury records an increase in demand for dollar assets (however strange it may sound)
For the first 6 months of 2017, the net inflow of foreign capital into US assets (total purchases minus cumulative sales) increased almost 10 times from 2016 and amounted to $ 225 billion, of which treasures 47.3 billion, agency papers 68 billion, corporate bonds 57 billion and 53.3 shares billions. The current 225 billion in the first half of the year is about three times less than 10 years ago, but significantly more than everything that has happened in the last 5 years. The data do NOT affect deposits, promissory notes, commercial, trade loans, advances and money market instruments. Only long-term dollar financial instruments.
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According to historical standards, the results for the first half of 2017 are, of course, very modest (similar flows took place 15-20 years ago), but you need to understand that the compression of the current account surplus in major US donor countries and the halt of global debt expansion (except for China ) hit hard on dollar assets.
In general, there is no one-to-one correlation between the dollar rate and capital flows (there are much more complex dependencies and multifactor models). The global trends in credit and financial expansion and the presence of an excess of financial resources among institutional units have a significantly more significant impact on the long run. All this may increase or weaken through the level of fear among investors and those who decide on the distribution of cash flows.
Exploring trends in accumulated cash flows, it should be noted that foreign investment in US stocks declined from 2013 to 2016. And this is in the period of doubling the capitalization of the American stock market and the most powerful rally in history. Those. It is obvious that foreign investment was not at all decisive in shaping the rally in the market.
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Investments of foreigners in treasuries began to fall from 2015 - to half a trillion from the maximum. The main reason is the sale of treasuries by oil exporters to stabilize the budget, exchange rate and capital outflow, in addition to this massive sales from China at the time of the formation of a hole in the financial account in the balance of payments.Together with the stabilization of prices for raw materials and the balance of payments in China, moderate purchases began in 2017.
But where foreigners invest regularly is corporate bonds and mortgage agency papers (in the last, almost $ 1 trillion was invested since 2011).
Now, as for the strengthening of the dollar from the end of 2014 to 2017. In connection with a record shortage of foreign investment (which by the way went into minus for the first time in history)
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and on expectations of expanding the yield spread between dollar-denominated assets and the currencies of developed countries, the United States began a record repatriation of its foreign home investments.
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They implemented over $ 200 billion annually, which is more than twice the crisis of 2009. There, this was short-term, fast, and since 2015, this is happening with a protracted effect. The tendency for Americans to sell foreign assets only ceased from April 2017.
In general, there is a certain normalization of capital flows (which was mentioned earlier in the analysis of the balance of payments). There are some discrepancies with the Treasury data due to the difference in classification and accounting, but global trends are similar.
4th quarter of 2017 should remain for the dollar.Historically, the dollar almost always strengthened in the 4th quarter, but the essence is different. Too long being in the zone of weakness is unacceptable in terms of maintaining the status of a reserve currency. Obviously, if you invest in treasuries at 2%, and the dollar goes down by 15% per year, then from the point of view of maintaining investment accounts, this is a disaster and, at least, will turn back to new investments. As a maximum, it can provoke a flight from dollar assets, which will further bring down the dollar.

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