DEFINITION of 'Treasury International Capital - TIC'

Treasury International Capital (TIC) data measures flows of portfolio capital into and out of the U.S., and the resultant positions between U.S. and foreign residents. The data is compiled and published by the U.S. Treasury, and is also used by the Bureau of Economic Analysis as an input into the U.S. Balance of Payments data. TIC data is used as an economic indicator to help understand and predict the direction of the U.S. dollar.

BREAKING DOWN 'Treasury International Capital - TIC'

Formally, 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 include U.S. branches of foreign banks, while foreign residents include offshore branches of U.S. banks. The information is collected from a number of institutions in the U.S., including banks and other depository institutions, and securities brokers and dealers. Data on securities transactions is recorded monthly, and cross-border positions and derivatives contracts are recorded quarterly.

TIC data, therefore, summarizes the effects of net foreign portfolio investment flows into the U.S. This is regarded as an important economic indicator because, as with any other balance of payments indicator, it can help explain past movements in the U.S. dollar (the data is released with about a 6-week lag) and provide information to use in forecasting the future direction of the dollar. Similarly, the data also helps with analysis of price movements of and net demand for the securities detailed in the TIC report, with a focus on net foreign demand for U.S. Treasuries which is regarded as a particularly important indicator. The data can thus affect price movements in the U.S. Treasury market too.

Taking into account activities by all parties, there was a net TIC outflow of $38bn in March 2018. A deeper look into the data showed significant differences between types of securities. There were net foreign purchases of long-term securities of almost $62bn in March 2018, resulting in a 12-month total of some $572bn, which was significantly higher than the prior year (12 months to March 2017) of $268bn. However, foreigners were net sellers of just over $10bn worth of U.S. Treasuries in March 2018. There were nevertheless still net inflows of just under $47bn into the U.S. Treasury market in the 12 months to March 2018, a turnaround from net outflows of $57bn in the prior year.

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