January 2011 U.S. Treasury Statement and Debt Overview

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January outlays of $276.3 billion and receipts of $226.6 billion added another $49.8 billion to the federal budget deficit. The U.S. federal debt held by the public stood at $14.131 trillion at the end of January.
 

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Foreigners held $4.37 trillion, or a little less than one-third of the U.S. public debt at the end of December 2010. China remained the largest foreign creditor in December ($892 billion) despite selling $4.0 billion of Treasury securities. Great Britain, on the other hand, purchased $29.5 billion in December -- a 5.8 percent increase from November. Interestingly, the “other” (aggregated) category has been a net seller for the past couple of months, dropping $20 billion since October.
 

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Central banks control 64 percent of the foreign-held U.S. Treasuries, down from 72 percent a year earlier.
 

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The Federal Reserve overtook both China and Japan during November in terms of U.S. Treasury holdings, and it has been adding to its holdings since then. Furthermore, were the Fed to maintain its December rate of Treasury purchases for a year, it would more than double its current holdings. As mentioned above, China was a net seller in December, while Japan’s pace of purchases was comparatively slow.

More recent data shows the Fed has ramped up purchases of U.S. Treasury debt since December, and held nearly $1.2 trillion as of mid-February.
 

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Flows into the United States for all types of investments was greater than outflows in December, as evidenced by the positive three-month-average net inflows shown by the Treasury International Capital (TIC) accounting system. Although the rate of inflows rose in December the three-month average fell because of the influence of meager transfers during October.
 

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What is apparent, however, is that short-term U.S. securities (e.g., T-bills) seem to be losing their international appeal, perhaps in part because of the paltry yields associated with those investments and the expectation that interest rates could soon begin to rise. Foreign investors were net sellers of short-term U.S. debt during every month since September -- with the exception of October -- hence why the three-month average went negative in November.
 

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Net inflows into long-term public debt retreated somewhat in December, but remained positive. Purchases of private securities have been relatively stable since September -- averaging $18.1 billion.