Dear CIGAs,

Following are a few charts detailing the release of this month’s Treasury International Flows data for the month of January 2010.

A few salient points –

Every asset category saw a drop in purchases from the previous month whether it was debt or equities. What strikes me however is the continued sell off of US Agency Debt (think Fannie and Freddie) as well as US Corporate debt. While the rate of sales of US Agency debt has declined (although there continues to be net divesture of US Agency debt which no doubt is related to the woes in the housing sector), the rate of selling of US Corporate Debt seems to be accelerating.

While this data is dated by two months, and a lot can happen during such a time interval, it is evident from this data that foreign investors are losing their appetite for US corporate debt. If that is indeed the case, then it is difficult to see how talk of a “jobless” recovery is going to continue with emphasis on the word “recovery” this time around. I fail to see how one can paint the picture of a healthy recovery when foreign investors want no part of providing capital for US corporations. Maybe they are not as prone to being manipulated by the Spin and BS that comes out of Wall Street as US based investors apparently are. Who knows? But either way, this is something that bears continued monitoring. If US Corporate debt is not finding a home outside of the US, it could be that these foreign lenders want a higher rate of return on their capital before they are willing to part with it. That comes right off the bottom line of US corporations.

Investors are still buying US equities but at a reduced rate. Purchases were at an eight month low. Apparently, Treasury Debt is still being taken although purchases were the lowest in three months. They are still at respectable levels however. It seems as if the only US securities that have much interest from abroad are this Treasury debt. That is telling.

I will get some info on the trade balance and the country ownership of Treasuries up a bit later.

Click here to view today’s Foreign Treasuries and Notes Purchases, Foreign Agency Debt Purchases, Foreign Purchases of US Corporate Bonds, and Foreign Net Stock Purchases charts from Trader Dan Norcini…