Treasury International Capital (TIC)

What Is Treasury International Capital (TIC)?

Treasury International Capital (TIC) is a set of monthly and quarterly statistical reports measuring all flows of portfolio capital into and out of the U.S. what's more, the resultant positions between U.S. what's more, foreign residents. The data is utilized as a economic indicator and can assist with predicting the direction of the U.S. dollar (USD).

Understanding Treasury International Capital

The Treasury International Capital (TIC) reporting system is the U.S. government's source of data on capital flows into and out of the United States, excluding direct investment, and the resulting levels of cross-border claims and liabilities. U.S. residents incorporate U.S. parts of foreign banks, while foreign residents incorporate offshore parts of U.S. banks.

The information is assembled and distributed by the U.S. Treasury and is additionally utilized by the Bureau of Economic Analysis as an input into the U.S. Balance of Payments data.

Data is collected from a number of institutions in the U.S., including banks and other depository institutions, as well as securities brokers and dealers. Data on securities transactions is recorded monthly, and cross-border positions and derivatives contracts are recorded quarterly.

Recording Treasury International Capital

The Treasury International Capital (TIC) report is broken down as follows:

1. Gross purchases of domestic U.S. securities: The total number of U.S. securities purchased by overseas investors.
2. Gross sales of domestic U.S. securities: The total number of U.S. securities sold by overseas investors.
3. Domestic Securities Purchased, net: The total outflow or inflow of capital from purchases or sales of U.S. securities by overseas investors. This is calculated by subtracting gross sales from gross purchases.
4. Private, net/2: Private purchases of Treasury bonds (T-Bond) and notes, government agency bonds, U.S. corporate bonds, and equities traded on stock exchanges.
5. Official, net/3: Purchases of Treasury bonds and notes, government agency bonds, U.S. corporate bonds, and equities traded on stock exchanges from foreign public institutions, governments, and central banks.
6. Gross purchases of foreign securities from U.S. residents: The total amount of capital that enters the U.S. as a result of U.S. residents selling foreign securities to overseas entities.
7. Gross sales of foreign securities to U.S. residents: The total number of foreign securities purchased by U.S. residents.
8. Foreign securities purchased, net: Calculated by subtracting item 7 from item 6, this line gives the total inflow or outflow in light of domestic purchases or sales of foreign securities.
9. Net long-term securities transactions: Total gross purchases of long-term U.S. securities by foreign investors, minus gross sales of long-term securities by overseas investors to U.S. residents.
10. Other acquisitions of long-term securities: A net figure of all other sorts of long-term transactions not alluded to in the above category.
11. Net foreign acquisition of long-term securities: Calculated by adding item 10 to item 9, here the treasury gives a complete gather together of all long-term U.S. securities acquired by overseas investors.
12. Increase in foreign holdings of dollar-denominated short-term U.S. securities and other custody liabilities: All short-term U.S. Treasury securities, bank, and broker liabilities sold to foreign entities.
13. Changes in banks' own net dollar-denominated liabilities: Measures USD liabilities reported by banks.
14. Monthly net TIC flows: A total measure of long-and short-term capital flows all through the U.S. on a net basis.

Illustration of Treasury International Capital

The Treasury reported a $146.4 billion net foreign inflow of U.S. securities in March 2021, almost double the $73.7 billion in inflows kept in the previous month. Private overseas investors made net purchases totaling $140 billion during a similar period, adding to the $6.5 billion purchased by foreign central banks and other government entities.

Advantages and Disadvantages of Treasury International Capital

Treasury International Capital (TIC) data sums up the effects of net foreign portfolio investment flows into the U.S. furthermore, as a result, is closely monitored by traders. Studying it can assist with making sense of past movements in the U.S. dollar (the data is delivered with about a 6-week lag) and give information to use in forecasting the future direction of the greenback.

Essentially, the data can uncover what type of U.S. securities are famous, and the probability of potential interest rate climbs — if the U.S. deficit isn't financed by normal inflows, borrowing costs will probably rise, weighing on economic growth. In any case, the data is in no way, shape or form perfect. The Treasury itself has admitted that it is difficult to accurately account for all overseas holdings of U.S. securities.

Highlights

• Treasury International Capital (TIC) data measures flows of portfolio capital into and out of the U.S., and the resultant positions between U.S. furthermore, foreign residents.
• Treasury International Capital (TIC) reports can function as economic indicators, assisting with predicting the direction of the U.S. dollar and interest rates.
• The data is gathered and distributed by the U.S. Treasury and is additionally involved by the Bureau of Economic Analysis as an input into the U.S. Balance of Payments data.