Foreign Demand for U.S. Financial Assets Declined in March

International demand for U.S. stocks, bonds and other financial assets weakened for a second straight month in March as a stronger economic outlook emboldened investors to take other risks.

Net selling of long-term equities, notes and bonds totaled $13.5 billion during the month, the biggest net sales total since May 2009 after selling of $13.3 billion in February, the Treasury Department said today in Washington. The median estimate of five economists surveyed by Bloomberg was for net buying of $35 billion of long-term assets.

“The data does not suggest a pronounced global investor rush into safety assets,” Gennadiy Goldberg, U.S. strategist at TD Securities Inc. in New York. “The weaker headline reading is the result of a greater number of foreign securities sold to U.S. investors, likely a consequence of decreasing global uncertainty thus far in the year.”

The report showed investors were willing to seek higher-yielding assets amid signs of a stronger U.S. economy. Consumer spending climbed in February by the most in five months and confidence unexpectedly improved in March, showing job-market gains are helping Americans overcome tax increases and concern about federal budget cuts.

Including short-term securities such as stock swaps, foreigners bought a net $2.1 billion in March, down from net purchases of $61.9 billion the previous month.

China remained the biggest foreign owner of U.S. Treasuries in March after its holdings fell $1.4 billion to $1.25 trillion, according to the Treasury. Japan, the second-largest holder, maintained its holdings at $1.11 trillion.

Foreigners bought a net $5.3 billion of Treasuries in March, according to today’s report, up from $2.6 billion the month before.

To contact the reporter on this story: Meera Louis in Washington at mlouis1@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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