Foreigners continued to buy American in May.
Overseas investors bought $45 billion worth of U.S. stocks and bonds, the government said Monday in its monthly Treasury International Capital report. That's up from $31 billion in April and above the $40 billion net purchase forecast by economists.
Among the big purchasers, as usual, were China, whose official stock of U.S. Treasury holdings rose by $7 billion to a globe-topping $1.16 trillion, and Japan, whose holdings rose $6 billion to $912 billion.
Despite the time lag, the numbers get eyeballed in the market because profligate U.S. spending and rampant overseas borrowing play on fears that our creditors will provoke a financial crisis by deserting us.
The dump-the-debt scenario is somewhat far fetched, of course. Foreign purchases of U.S. assets are probably more appropriately seen as an artifact of the yawning U.S. trade deficit. Those selling us stuff end up with dollars and buy bonds (and some stocks) with the proceeds. There is no great reason to expect funds to stop flooding into the United States as long as others continue to base their economies on selling stuff to us.
Nonetheless, the dollar-collapse fears are even more prominent lately as lawmakers toy with allowing the United States to default on its debt by failing to raise the debt ceiling before the government runs out of money next month.
But with Europe on the brink of a meltdown, it is not quite clear where all the money rushing out of dollars might go – which keeps the funds flooding into Treasury, at least for the moment.
The race to the bottom in currencies could get more competitive.
The dollar has a nice head start, having dropped 16% over the past year against a basket of major U.S. trading partners. But the benefits of a weaker currency – cheaper exports, the ability to stick it to your creditors by repaying them with less valuable paper, abundant opportunity to blame your problems on hapless central bankers – aren't lost on people outside this country.
The euro is "objectively MOREColin Barr - Jun 7, 2011 6:40 AM ET
The good news out of Friday's jobs report is that everyone's favorite economic villain, commodity prices, may be about to change sides.
The weak jobs report Friday adds to the sense that U.S. growth is slowing. That's yet another setback for the 13.9 million people out of work, and an unhappy thought for anyone gunning for better wages or more hours this year.
You can blame the past year's surge in prices for MOREColin Barr - Jun 3, 2011 11:26 AM ET
In the latest example of a world gone mad, some strategists are now making the case that buying the dollar is a can't-miss bet.
It is time to buy the buck and sell the euro, its counterpart in the rich-world-ruination trade, says Janney Capital Markets analyst Guy LeBas. He cites the rising risk that Greece will blow up as policymakers wring their hands over how to prop up the debt-soaked state. MOREColin Barr - Jun 1, 2011 6:37 AM ET
The best ideas are the simple ones, and investing expert Joe Rosenberg has a few great ones on how to deal with today's tough markets.
The investment world seems to be getting stranger -- and more perilous -- with every passing day for us retirees or almost-retirees who don't happen to be rich professional investors. What are we supposed to do with our money in a world in which short-term savings MOREAllan Sloan, senior editor-at-large - May 24, 2011 5:00 AM ET
China's holdings of U.S. government debt inched lower for the fifth straight month.
But America's biggest foreign creditor continued to hold $1.14 trillion of Treasury securities through official channels as of March – 26% more than Japan, the second-biggest lender to the United States.
And with China struggling with its own economic ills, such as slowing growth and persistent inflation, the idea of China dumping its dollar holdings seems more remote than MOREColin Barr - May 16, 2011 9:49 AM ET
It's early yet to lose sleep over the job market's one-step-forward, one-step-back routine. Even so, the latest pivot is eye-opening.
A government report out Thursday showed initial claims for unemployment insurance rose 10% from the previous week to an eight-month high. Because the number is weekly, economists tend to take initial claims with a light sprinkling of salt – particularly in a week featuring tornadoes and Japan-related auto industry bottlenecks.
Even so, a look MOREColin Barr - May 5, 2011 11:33 AM ET
Memo to Bill Gross: You've got the right idea but the wrong trade.
That's the implication of a note out this week from Bank of America Merrill Lynch. It advises clients that the way to make money on rampant U.S. fiscal stupidity is to bet against the swooning dollar -- not on a massive selloff in government bonds, a la Gross' Pimco Total Return fund.
Rates strategist David Woo says that even with the dollar MOREColin Barr - Apr 28, 2011 11:04 AM ET
Standard & Poor's has a lot of people worried about the implications of a downgrade of the U.S. credit rating. The real worry is what our debt levels will do to the value of the dollar.
FORTUNE -- There's been a lot of hand-wringing and posturing over Standard & Poor's announcement that it has changed its outlook for the U.S. Treasury's long-term debt to "negative" for the first time since it MOREAllan Sloan, senior editor-at-large - Apr 25, 2011 8:56 AM ET
Barring any major surprise concessions out of Washington, the U.S. dollar is set up to continue crashing throughout this year. Here's how to play it.
By Daryl Jones, Hedgeye
FORTUNE -- I'm a born and bred Canadian. Despite my nationality of birth, after living in the United States for upwards of the last fifteen years, I can quite confidently say this is a great country. At Hedgeye, we spend a lot of MOREApr 22, 2011 9:39 AM ET
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