The highest capital outflow in US since February 2009 took place as foreign investors reduced US treasury bonds and stocks by 106.8 billion dollars, announced US Treasury Department on Monday.
Foreign investors are now focusing more on loaning instruments and lowering the size of their portfolios.
The investors lowered their long term treasury bonds by 10.8 billion dollars in August and increased it back by 27.8 billion dollars in September. China, the biggest client of US bonds, made purchases of 25.7 billion dollars increasing their US bond stocks to 1 trillion 294 billion dollars, which is the peak number for the last four months.
In September, private investors were positioned as the straight buyers for treasury loaning instruments, while foreign investment banks including official investors were on the seller positions.
US Department of the Treasury revised their net capital outflow August prediction to 13.9 billion dollars from 2.9 billion dollars.
When the US government had stiff budget discussions before the government shutdown in September, the interest rate for bonds with due date less than 1 month increased. This led investors with these instruments to position themselves as sellers in order to lower the loss.
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