UPDATE 2-US sees record capital inflow; China buys Tsys

(Adds detail)

* Net long-term inflows hit record

* Foreigners boost Treasury, agency, corporate bond buying

* China adds to Treasury stash for first time since Sept

By Steven C. Johnson

NEW YORK, May 17 (BestGrowthStock) – Foreigners bought a record
$140.5 billion of long-term U.S. securities in March, the
Treasury Department said on Monday, and more than doubled
purchases of U.S. government bonds.

China remained the largest holder of Treasury debt and
added to its holdings for the first time in seven months. Net
Treasury purchases by all foreign investors jumped by $108.47
billion in March from $48.1 billion in February.

“Long-term purchases exceeded our best expectations and
clearly show foreign investors have not satiated their appetite
for U.S. securities,” said Michael Woolfolk, senior currency
strategist at BNY Mellon in New York.

March’s net long-term inflow was roughly three times the
$47.1 billion inflow in February and shattered a previous
record set in May 2007. The Treasury began compiling the data
in the 1930s.

Investors said some of the Treasuries buying may have been
driven by worries about Greece’s debt crisis and fear of
exposure to the euro.

Demand for U.S. assets was particularly broad in March,
with foreigners snapping up $16 billion in corporate debt,
snapping a nine-month streak of net selling. U.S. agency debt
purchases spiked to $21.9 billion from $2.4 billion.


China bought $17.7 billion worth of U.S. government debt in
March, swelling its total holdings to $895.2 billion. It was
the first time China added to its Treasury stash since

Japan remained in second place with $784.9 billion, up from
$768.5 billion in February.

“This is a vote of confidence, of course, and we’re
impressed with the breadth of buying and the ‘quality’ of those
buyers — UK, Japan, China, OPEC, Canada, Germany,” said David
Ader, head of government bond strategy at CRT Capital Group,
Stamford, Connecticut.

China’s net Treasury purchases may be “the first tentative
signs that maybe they really are hostage to the U.S. dollar and
are really struggling to find an alternative to the dollar,”
said Alan Ruskin, chief international strategist at RBS
Securities in Stamford, Connecticut.

Some analysts said the worsening of a European debt crisis
that resulted in a $1 trillion bailout for troubled euro zone
governments may show foreigners increased U.S. asset purchases
in April and May.

The euro has lost more than 13 percent against the dollar
so far this year, hitting a four-year low beneath $1.23 on

“The data essentially means the dollar is very well
supported on a trade and investment flow basis, which drives
the long-term value of the currency,” Woolfolk said.

Overall inflows, which include short-term securities such
as Treasury bills, also rose in March, with foreigners buying a
net $10.5 billion, compared with an upwardly revised $9.7
billion inflow the prior month.

U.S. banks’ own dollar-denominated liabilities to foreign
residents also decreased sharply, by $123.8 billion. Analysts
said that could be partly tied to dollar-demand from investors
in Europe.
Stock Investing

(Reporting by Steven C. Johnson; Editing by Chizu Nomiyama and
Dan Grebler)

UPDATE 2-US sees record capital inflow; China buys Tsys