October 2011 U.S. Treasury Statement and Debt Overview

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Outlays of $261.5 billion and receipts of $163.1 billion added $98.5 billion to the federal budget deficit in October, the first month of fiscal year 2012. The federal debt held by the public stood at $14.994 trillion at the end of October.
 

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Foreigners held $4.660 trillion, or 31 percent of the U.S. public debt at the end of September. China remained the largest foreign creditor ($1.148 trillion). The United Kingdom was the biggest buyer in absolute terms ($24.4 billion; 6.1 percent), while the Caribbean banks had the largest percentage change ($11.8 billion; 7.3 percent). Holdings by the “other” (aggregated) category inched up for a second month in September.
 

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The Federal Reserve continued to add to its holdings of U.S. Treasury securities. However, the Fed’s pace of net Treasury purchases has slowed considerably.
 

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According to the Treasury International Capital (TIC) accounting system, net flows into the United States for all types of investments amounted to $57.4 billion in September.
 

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Delving into the TIC report details reveals that long-term U.S. public debt was the only category with positive net inflows. Long-term private equities and short-term public debt saw net outflows.
 

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The large sell-off of U.S. Treasuries in September and October appears to have been reversed. The Federal Reserve holds those securities in custody for various foreign central banks. That sell-off had raised red flags in the markets for two reasons: 1) The August 2007 divestiture either triggered -- or at least was associated with -- the first credit crisis that eventually turned into the December 2007 recession. 2) Had central bank selling continued, the Fed could have become the buyer of last resort, likely resulting in much higher interest rates and inflation.