China resumes Treasury purchases in January

NEW YORK (Reuters) - Foreigners began 2012 by buying U.S. Treasuries, U.S. Treasury data showed on Thursday, with China resuming purchases and Japan's holdings climbing to a record.

Net purchases of U.S. Treasuries rose to $82.96 billion in January after net selling of $14.90 billion in December.

China, the biggest foreign creditor, increased Treasury holdings by $7.6 billion in January to $1.16 trillion.

Bank of New York Mellon termed China's January's purchases a significant improvement as China was a net seller of Treasuries from August to December, "selling a staggering $102.6 billion in December alone", the bank said.

Japan, the second-largest holder of U.S. Treasuries, increased their holdings to a record $1.079 trillion.

Overall, net long-term capital inflows were $101.05 billion up from the $19.12 billion the prior month.

"China increased its purchase by $8 billion. So what?" said Eric Green, chief of U.S. rates research and strategy at TD Securities in New York. "The downtrend in Chinese buying continues. Their net Treasuries position is still down $33 billion over the past 12 months. They will buy Treasuries but will buy them a slower rate."

Graphic on foreign holders of U.S. Treasuries:

http://link.reuters.com/zug27s

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Net overall capital inflows into the United States fell to $18.825 billion in January from December's revised inflow of $95.22 billion, not enough to cover the trade deficit for the month.

The trade deficit for January was $52.57 billion. The department originally reported a net overall inflow of $87.1 billion in December.

(Reporting By Nick Olivari; Additional reporting by Richard Leong; Editing by James Dalgleish)

Source: http://news.yahoo.com/china-resumes-treasury-purchases-january-144053897.html

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