Finance & Business World

International demand for long-term U.S. financial assets rose in March as China added to its portfolio of Treasury securities, according to government data.

Total net purchases of long-term equities, notes and bonds rose a net $55.8 billion, compared with buying of $22 billion in February, the Treasury said today in Washington. Including short-term securities such as stock swaps, foreigners bought a net $23.2 billion, compared with net selling of $91.1 billion the previous month.

Investors worldwide have sought a haven from global market turmoil by buying U.S. Treasury securities, which last year posted the best returns since 1995. The government securities gained 14 percent in 2008, according to Merrill Lynch’s U.S. Treasury Master Index. So far this year, the index has declined.

“As the economy gradually exhibits signs of improvement, foreign appetite for U.S.-denominated securities improves,” said Richard Yamarone, director of economic research at Argus Research Corp. in New York. “Even in this difficult environment, the U.S. remains the safe haven.”

The U.S. Treasury and the Federal Reserve pledged $12.8 trillion to drag the economy out of its longest recession since the 1930s and restore confidence in the global financial system. The Fed and other central banks of the industrial world, in turn, have lowered interest rates to near zero in the aftermath of the credit crisis.

Beat Forecasts

The Treasury’s reporting on long-term securities captures international purchases of government notes and bonds, stocks, corporate debt and securities issued by U.S. agencies such as Fannie Mae and Freddie Mac, which buy mortgages.

Before today’s report, economists predicted investors would buy a net $32.5 billion of long-term securities in March, according to the median of eight estimates in a Bloomberg News survey.

Net foreign purchases Treasury notes and bonds were $55.3 billion in March compared with purchases of $21.6 billion a month earlier no fax payday loans.

China remained the biggest foreign holder of U.S. Treasuries, after its holdings rose 3.2 percent to $767.9 billion in March. Japan, the second-largest holder, reported holdings rose 3.7 percent to $686.7 billion.

The Treasury’s last report showed China’s purchases of U.S. securities rose weeks before Chinese officials questioned whether such investments were safe.

China ‘Worried’

People’s Bank of China Governor Zhou Xiaochuan in March urged creation of a “super-sovereign reserve currency” after Chinese Premier Wen Jiabao said he’s “worried” a weaker U.S. dollar might hurt China’s investment. The U.S. needs China to sustain its purchases to fund billions’ worth of programs aimed at reviving the economy about 70 percent of which reflects consumer spending.

Still, China’s purchases slowed in February and most were in short-term Treasury bills.

Timothy Geithner will make his first trip to China as Treasury secretary next month, the Treasury said May 12. In a semiannual report on foreign-exchange policies released April 15, Geithner refrained from labeling China as a currency manipulator.

A bipartisan group of lawmakers, led by Democratic Senator Debbie Stabenow of Michigan and Republican Jim Bunning of Kentucky, on May 11 announced plans to revive legislation to press China to raise the value of its currency, the yuan, by threatening to raise tariffs.

Foreign demand for U.S. agency debt from companies such as Fannie Mae and Freddie Mac continued to slide, with net sales of $15.6 billion after net buying of $1.1 billion.

Net foreign purchases of U.S. equities were $13.2 billion in March, after net purchases of $5.1 billion the previous month. Investors bought a net $3.5 billion in U.S. corporate debt in March, the report showed.

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