Treasury International Capital Data for December

Because I prefer to look at the data for myself, rather than depend on the spinmeisters and headline makers, and because I still enjoy the instant publication of the source data over the internet, I visited the U.S. Treasury web site this morning to get the report on the net capital flows for December. http://www.treas.gov/press/releases/reports/js2251tic_data.pdf

I like to download and print out the .pdf file from the Treasury and print it out because it is only two pages, and I like the picture of the treasury building that is part of the 'letterhead.' It just looks like money. The report follows a consistent format and with a little practice, your eye can look on page two and pick out the number that is so widely reported. Under the heading Net Long-Term Securities Flows it appears. It appears again at the bottom right hand corner of the table of numbers published at the end of the report.

The numbers in the table give a context to The Number in terms of a series of similar numbers. Thus we see that December's $61.3 billion inflow of net long-term securities can be compared with the monthly figures for the previous three months, and with the figures for the whole years of 2004, 2003 and 2002.

A useful number for comparison is our balance of trade in goods and services for the latest month. You need to look to the Census Department for that one.
http://www.census.gov/foreign-trade/statistics/highlights/monthly.html

So we see that the December 2004 trade balance was minus $56.4 billion. This was a 4.9% improvement from the previous month. So basically the Treasury International Capital data released today shows that the trade imbalance was financed by net capital inflows from foreign investors.

A third useful number for comparison to the TIC data is the expected number. In other words, the market will anticipate what the Treasury will release. If the number is better than expected, this would be positive for the dollar. If the number is not as good as expected, this can have an impact negatively. Today's number was a bit better than expected.

This number caused an added volatility in the market for about an hour, but now the market is trading about where it was before the report was released. A good place to find what the expected number is, previous to its release is the U.S. Economic Calendar published by Refco Global Research among many others. See link at https://research.refco.com/ms/reports/

For a more in-depth article on the TIC system, see Federal Reserve Bulletin for October 2001, pages 633-650