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Kentpaul
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Hedge Fund Analyst in a Private Bank
  • US July TIC data suggests private capital flight from the USD? 0 comments
    Sep 16, 2009 1:21 PM | about stocks: CNY, UDN, FXE, UUP, EWH, EWJ, FXY, FXB, FXC, FXA

    So the July US TIC data came out pretty horrifically. In particular there was evidence of accelerating capital flight with private investors selling a net $131bn of US assets. In July the US Dollar index against other major currencies fell 2.23% and in the emerging markets central banks struggled to suppress their currencies or maintain their pegs. For instance the Hong Kong Monetary Authority, according to Bloomberg, injected funds on 14 occasions in July and another several hundred million dollars today. In fact Bloomberg also today quoted Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, expressing the view that they face a dilemma of creating an asset bubble in the face of continuing liquidity inflows or breaking the peg and raising rates, which conversely may attract even more inflows as investors search for yield.
     
    BarCap described the data as 'as bad as bad can be'. However if private investors sold a net $131bn of US assets in July, how much will they be selling when Emerging Asia and the other two BRIC's start their rate tightening cycle, $500bn a month?

    Disclosure: Long Gold

     
    Themes: USD, US Dollar, Gold, FX, TIC Stocks: CNY, UDN, FXE, UUP, EWH, EWJ, FXY, FXB, FXC, FXA
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