February 2011 U.S. Treasury Statement and Debt Overview

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Outlays of $333.2 billion and receipts of $110.7 billion added another $222.5 billion to the federal budget deficit in February. The U.S. federal debt held by the public stood at $14.195 trillion at the end of February.
 

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Foreigners held $4.453 trillion, or a little less than one-third of the U.S. public debt at the end of January 2011. China remained the largest foreign creditor in January ($1.155 trillion) despite selling $5.4 billion of Treasury securities. Brazil was the biggest buyer in both absolute ($11.5 billion) and percentage change (6.2 percent) terms. Interestingly, the “other” (aggregated) category has been a net seller for the past several months, dropping $20 billion since October.
 

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Central banks control 71 percent of the foreign-held U.S. Treasuries, down from 79 percent a year earlier.
 

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The Federal Reserve overtook Japan during November in terms of U.S. Treasury holdings, and is set to jump above China as well. Furthermore, were the Fed to maintain its January rate of Treasury purchases for a year, it would more than double its current holdings. As mentioned above, China was a net seller in January, 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 January, and held nearly $1.3 trillion as of mid-March.
 

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Flows into the United States for all types of investments were greater than outflows in January, as evidenced by the positive three-month-average net inflows shown by the Treasury International Capital (TIC) accounting system. Although the rate of inflows fell to $32.511 billion in January (from $49.705 billion in December) the three-month average rose slightly.
 

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Short-term U.S. securities (e.g., T-bills) continue to lose their international appeal, perhaps in part because of the paltry yields associated with those investments. 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 by $6.263 billion in January, but remained safely in positive territory ($57.745 billion); the three-month average jumped higher because of losing the influence of October’s paltry showing of just $37.605 billion. Purchases of private securities have been relatively stable since September -- averaging $15.9 billion per month over that period.