Foreign Demand for U.S. Long-Term Securities Drives Inflow

A significant portion of the $212 billion inflow stemmed from increased foreign purchases of U.S. long-term securities, totaling $221.8 billion. This reflects a sustained appetite for U.S. Treasury bonds, corporate bonds, and equities. Private foreign investors accounted for $157.8 billion of this total, while foreign official institutions contributed $64.0 billion. This demonstrates broad-based demand from both private and governmental sources.

Interestingly, U.S. investment in foreign securities remained comparatively modest, with net purchases of only $1.6 billion. This disparity highlights a continuing imbalance: foreign entities are investing more heavily in the U.S. than U.S. entities are investing abroad. What factors might be contributing to this sustained imbalance in capital flows?

Private vs. Official Inflows: A Closer Look

The Treasury report delineated the sources of foreign investment, revealing that net foreign private inflows reached $167.2 billion in November, while net foreign official inflows amounted to $44.9 billion. This breakdown provides a nuanced understanding of the drivers behind the overall inflow, distinguishing between investment decisions made by private entities and those driven by governmental or central bank policies.

Short-Term Securities and Banking Sector Dynamics

Beyond long-term securities, the report also detailed movements in short-term holdings. Foreign residents modestly increased their holdings of U.S. Treasury bills by $0.4 billion. However, overall holdings of dollar-denominated short-term securities and other custody liabilities decreased by $6.5 billion. Simultaneously, U.S. banks experienced a $1.7 billion decrease in their net dollar-denominated liabilities to foreign residents. These shifts in short-term capital flows provide additional context to the broader picture of international financial activity.

The Scope and Limitations of the TIC Data

The TIC system is a comprehensive framework, tracking portfolio investment, banking claims, and broader financial positions. However, the Treasury acknowledges that the data relies heavily on custodial reporting and may not fully capture the ultimate ownership of U.S. securities. Therefore, caution is advised when drawing definitive conclusions about country-level holdings. The department emphasizes that the data should be interpreted as an indicator of trends rather than a precise measure of ownership.

The Treasury has scheduled the next release, covering December 2025 activity, for February 18, 2026. Investors and analysts will be closely monitoring this next report for continued trends and potential shifts in global capital flows.

The continued strength of foreign investment in U.S. assets underscores the enduring role of the United States as a safe haven for global capital. However, the relatively limited U.S. investment abroad raises questions about the long-term implications for the U.S. current account and its global economic position. Will this trend continue, and what policy adjustments might be considered to address the imbalance?

Frequently Asked Questions About Treasury International Capital Data

• What is the Treasury International Capital (TIC) system?

  The TIC system is the U.S. government’s primary framework for tracking cross-border portfolio investment, external debt, and financial positions between U.S. and foreign residents. It provides crucial data for policymakers and market participants.

• Why is the net TIC inflow important?

  A positive net TIC inflow indicates that more capital is flowing into the U.S. than is flowing out, which can support economic growth and lower interest rates. It reflects international confidence in U.S. assets.

• What is the difference between private and official inflows?

  Private inflows represent investments made by individuals and companies, while official inflows come from foreign governments and central banks. Both contribute to the overall TIC inflow, but their motivations and impacts can differ.

• How does U.S. investment abroad affect the TIC data?

  U.S. investment abroad is subtracted from the total inflow to arrive at the net TIC inflow. A smaller outflow of U.S. investment results in a larger net inflow, and vice versa.

• What are the limitations of the TIC data?

  The TIC data relies on custodial reporting, which may not fully capture the ultimate ownership of U.S. securities. Therefore, conclusions about country-level holdings should be interpreted with caution.