Foreign Buying of U.S. Portfolio Assets Gains on Asia Demand

 International investors were net buyers of U.S. long-term portfolio assets in September as demand strengthened from China and Japan, the two largest foreign holders of Treasuries.

The net long-term portfolio investment inflow was $25.5 billion after a revised $9.8 billion outflow in August, the Treasury Department said in a statement today in Washington. China raised its holdings of U.S. government debt by 2 percent and Japan boosted its by 2.5 percent, the department said.

The data cover the month in which the Federal Reserve decided against cutting back its bond purchases at a Sept. 17-18 meeting. The Fed buys $85 billion of Treasuries and mortgage-backed securities each month to keep downward pressure on borrowing costs. Officials will decide to pare purchases to $70 billion a month at their March 18-19 meeting, according to the median of economist estimates in a Bloomberg survey on Nov. 8.

Today’s report showed China’s holdings swelled $25.7 billion to $1.29 trillion in September. Japan increased its share by $29 billion to $1.18 trillion, the figures showed.

The Treasury’s monthly report on the cross-border flow of portfolio assets captures foreign buying and selling of U.S. securities as well as American investors’ transactions abroad. It also tracks holdings of Treasuries by countries.

(Source: Bloomberg)

U.S. Stocks Extend Records on Fed Bets Amid Factory Data

 U.S. stocks rose to records, with benchmark gauges capping a sixth week of gains, as investors assessed data on factory output amid growing speculation the Federal Reserve will maintain the pace of its monthly stimulus.

Exxon Mobil Corp. rallied 2.2 percent to a record after Warren Buffett’s Berkshire Hathaway Inc. disclosed a stake. FedEx Corp. climbed 1.6 percent as billionaire investorsGeorge Soros andJohn Paulson took positions. Fannie Mae and Freddie Mac increased at least 6.2 percent as Bill Ackman’s hedge fund bought shares in the government-backed mortgage insurers. Western Union Co. dropped 4.3 percent after the company said its chief financial officer is leaving.

The Standard & Poor’s 500 Index rose 0.4 percent to 1,798.18 at 4 p.m. in New York. The gauge gained 1.6 percent in the past five days, capping its longest streak of weekly gains since February. The Dow Jones Industrial Average added 85.48 points, or 0.5 percent, to 15,961.70, a third straight record. About 6.1 billion shares changed hands on U.S. exchanges today, in line with the three-month average.

(Source: Bloomberg)

Aussie Set for Fourth Weekly Drop on Taper Bets, RBA Speculation

 Australia’s dollar headed for a fourth weekly decline versus its U.S. peer as traders weighed the timing of a reduction in Federal Reserve stimulus that has buoyed asset prices around the world.

The Aussie fell for a fifth day in six yesterday after Fed Vice Chairman Janet Yellen said quantitative easing “will not continue indefinitely.” The currency traded within 0.5 percent of an eight-week low before the Reserve Bank of Australia releases minutes of its November meeting next week. Australia’s benchmark 10-year bond yield rose for a third week after touching the highest level in 20 months. New Zealand’s dollar was set for its first weekly advance in four.

“Tapering’s going to happen, and there’s a possibility, -- low as it might be -- that it will happen in December,” said Hans Kunnen, a senior economist at St. George Bank Ltd. in Sydney. “Medium term, Aussie is going lower.”

The Australian dollar slipped 0.1 percent to 93.10 U.S. cents as of 10:55 a.m. in Sydney from yesterday, when it dropped 0.5 percent. It has declined 0.8 percent this week, after touching 92.69 on Nov. 12, the lowest since Sept. 16.

New Zealand’s dollar was little changed at 82.73 U.S. cents, heading for a 0.2 percent weekly advance.

The yield on Australian 10-year government debt fell two basis points, or 0.02 percentage point, to 4.18 percent. It touched 4.3 percent on Nov. 13, the highest since March 2012. Yields have risen five basis points this week, adding to 16 basis point climb from Oct. 25 to yesterday.

(Source: Bloomberg)