International Demand for U.S. Assets Rises on Europe Crisis
International demand for U.S. financial assets rose more than forecast in July as investors sought shelter from the debt crisis in Europe, where leaders have been struggling to find a solution.
Net buying of long-term equities, notes and bonds totaled $67 billion during the month, compared with net purchases of $9.3 billion in June, the Treasury Department said today in Washington. Economists surveyed by Bloomberg News projected net buying of $27.5 billion of long-term assets, according to the median estimate.
Including short-term securities such as stock swaps, foreigners bought a net $73.7 billion in July, compared with net purchases of $15.1 billion the previous month.
“The safe haven demand for Treasuries was still the trade of the year until late July when Draghi said they were in it to win it,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said by e-mail before today’s report, referring to European Central Bank President Mario Draghi. “The U.S. still has the deepest most liquid markets in the world.”
U.S. assets have maintained their attraction as Spanish banks are hemorrhaging deposits and European leaders are still squabbling over the next steps needed to overcome the sovereign debt crisis. A Sept. 14 European Union finance ministers meeting in the Cypriot capital of Nicosia deadlocked over the timetable for a more unified EU banking sector.
