International Purchases of U.S. Assets Slow as China, Japan Trim Holdings

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International Demand for U.S. Assets Slowed in April (Update2)
By Vincent Del Giudice


June 15 (Bloomberg) -- International demand for U.S. financial assets grew more slowly in April as China, Japan and Russia trimmed holdings of Treasuries, a shift that may reinforce concern demand for American debt will wane amid record deficits.

Total net purchases of long-term equities, notes and bonds rose a net $11.2 billion, compared with buying of $55.4 billion in March, the Treasury said today in Washington. International holdings of Treasuries increased a net $41.9 billion, compared with the $55.3 billion gain in March. Including bills, the holdings fell a net $2.6 billion.

Chinese, Brazilian and Russian officials have expressed an interest in developing an alternative to the dollar as the world’s main reserve currency. Treasuries have tumbled since March in part because of worries about ballooning federal deficits, according to Federal Reserve Chairman Ben S. Bernanke.

“China and Russia both indicated a desire to diversify out of dollar denominated instruments, and April seems to have emphasized their current position,” Michael Woolfolk, senior currency strategist at Bank of New York Mellon Corp. in New York, said. “That came as a surprise.” ........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aRADYHh._dKQ