Brad Setser reports:
It is a good thing the US trade deficit has come down, because foreign demand for US financial assets — actually foreign demand for US assets other than short-term Treasury bills — has dried up.
Foreign investors bought $68 billion of T-bills in February. Russia alone (likely Russia’s central bank) bought close to $14 billion. Private investors — seemingly Japanese private investors — also bought $23.5b of longer-term Treasury notes. Otherwise, though, foreign investors didn’t buy much of anything. And Americans also didn’t buy many foreign assets.
![](http://4.bp.blogspot.com/_8rpY5fQK-UQ/SeaX-4Nw7pI/AAAAAAAAGc4/P42Or7XWXCI/s400/fors.png)
It will be interesting to see if March's rally in risk assets corresponded to an increase in demand by foreigners.
Source: Treasury
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