US overall net capital flows actual $159.9B (previous $203.6B)

US overall net capital flows actual $159.9B (previous $203.6B)

The US net capital flows, as reported by the US Treasury International Capital (TIC) data, experienced a significant shift in February 2023, with a net inflow of $51.6 billion, compared to a net outflow of $8.8 billion in January [1]. This shift was driven by a combination of factors, including changes in net foreign private and official inflows, as well as shifts in the holdings of long-term securities by both US and foreign residents.

In February, net foreign private inflows reached $36.2 billion, up from a net outflow of $26.9 billion in January [1]. This increase was primarily driven by net purchases of long-term US securities by foreign private investors, which totaled $117.5 billion in February, compared to net sales of $75.6 billion in January [1].

Net foreign official inflows, on the other hand, remained relatively stable, with a net inflow of $15.5 billion in February, compared to $18.1 billion in January [1]. However, the composition of these inflows shifted, with foreign official institutions increasing their net purchases of long-term US securities to $40.4 billion in February, up from $4.2 billion in January [1].

The increase in net foreign inflows in February was also reflected in the overall holdings of long-term US securities by foreign residents, which increased by $145.7 billion in February, compared to $79.8 billion in January [1]. This increase was primarily driven by net purchases of US government bonds, which totaled $122.5 billion in February, compared to net sales of $28.9 billion in January [1].

However, the trend in net capital flows reversed in January, with a net outflow of $8.8 billion, down from a net inflow of $139.8 billion in December [1]. This decrease was primarily driven by a net outflow of $26.9 billion in net foreign private inflows, which was more than offset by a net inflow of $18.1 billion in net foreign official inflows [1].

The impact of these changes in net capital flows on the US economy is complex and multifaceted. While an increase in net foreign inflows can lead to an appreciation of the US dollar and increased demand for US assets, it can also lead to increased competition for domestic firms and potentially higher inflation. Conversely, a decrease in net foreign inflows can lead to a depreciation of the US dollar and potentially lower demand for US assets.

In conclusion, the US net capital flows experienced a significant shift in February 2023, with a net inflow of $51.6 billion, up from a net outflow of $8.8 billion in January [1]. This shift was driven by changes in net foreign private and official inflows, as well as shifts in the holdings of long-term securities by both US and foreign residents. The impact of these changes on the US economy is complex and multifaceted, and will be worth monitoring in the coming months.

[1] Trading Economics. (2023, April 17). US Capital Flow. Retrieved April 19, 2023, from https://tradingeconomics.com/united-states/capital-flows
[2] MQL5. (n.d.). Overall Net Capital Flow. Retrieved April 19, 2023, from https://www.mql5.com/zh/economic-calendar/united-states/overall-net-capital-flow