The Phaserl


The King of Emerging Markets

by Doug Noland,

Global de-risking and de-leveraging have gained important momentum.

No respectable “flow of funds” analysis would be complete without examining “Rest of World” (ROW) data. I’ll try to make amends for a shortcoming of last week’s CBB.

Well, let’s take a brief look at Q1 2013 and then dive into the bigger picture. ROW gross holdings of U.S. assets declined $70bn during Q1 to $20.091 TN. But with U.S. ROW liabilities (foreign borrowing in U.S. markets) down $267bn, net asset holdings jumped nominal $197bn during the quarter to a record $10.034 TN.

On a seasonally-adjusted and annualized (SAAR) basis, ROW holdings of U.S. Credit Market Instruments jumped $682bn during Q1 (to $9.82 TN). Breaking that down, almost the entire increase was in ROW Treasury holdings that rose SAAR $655bn (to $5.701 TN), up from Q4’s $382bn increase.

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