Bloomberg

Global demand for U.S. stocks, bonds and other financial assets slowed in October from a month earlier, the Treasury Department reported.

Net buying of long-term equities, notes and bonds totaled $27.6 billion during the month compared with net buying of $77.2 billion in September, according to statistics issued today in Washington. Including short-term securities such as stock swaps, foreigners purchased a net $7.5 billion compared with net buying of $80.1 billion the previous month.

The U.S. economic recovery from the deepest recession since the 1930s has lagged behind growth in emerging markets, weighed down by an unemployment rate close to 10 percent and record home foreclosures.

“Non-developed countries are seeing a stronger recovery from the 2009 recession and investors are choosing to put money in faster-growing overseas markets,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York, before today’s report. “Risk is back on in a big way.”

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 home mortgages.

China remained the biggest foreign holder of U.S. Treasuries, after its holdings rose by $23.3 billion to $906.8 billion in October, according to the Treasury’s statistics.

The Chinese currency, the yuan, has strengthened since a two-year dollar peg was scrapped on June 19. The government will push forward the reform on the yuan’s exchange rate next year, according to a statement on the State Council’s website Dec. 12 following the Central Economic Work Conference.

The Treasury’s statistics on other countries showed Japan, the second-largest holder, increased its holdings by $12.8 billion to $877.4 billion in October. Hong Kong, counted separately from China, increased its holdings by $3.3 billion to $139.2 billion.

http://www.bloomberg.com/news/2010-12-15/global-demand-for-u-s-financial-assets-slowed-in-october-treasury-says.html