By Ashish Advani TIC Data tells us how foreigners are funding our U.S. debt. The headline April TIC or “Treasuries International Capital number (net purchases of long term securities) reduced to +US$11.2 Billion from the +US$55.4 Billion recorded in March.

On top of that, we just learned today that the current account deficit for Q1 was a negative US$101 billion. If you look at the TIC data for Q1, foreigners were funding only US$40 billion of that deficit. That means effectively we were a negative US$61 billion in the hole as a country for Q1.

Okay, back to this month’s TIC Data: The amount relating to the purchase of U.S. Treasuries seems odd given huge purchases from the United Kingdom. Frankly, I’m not sure what this means at this point. It’s highly unlikely that the U.K. bought over US$22 Billion of U.S. Treasuries last month when the US$22 Billion is the 12-month average for all Treasury purchases bought by everyone in the world.

China’s purchases of U.S. Treasuries decreased to+US$10.3 Billion from +US$14.8 Billion. Russia and Brazil showed small outflows in April, similar to the past few months. The biggest shift came from Japan, which shows an outflow of -US$1.2 Billion from the previous +US$23.2 Billion inflow.

While one number does not make a trend, I cannot help but wonder what this would mean from U.S. Deficits if the trend was to continue? If foreigners are unwilling to fund our deficits at the elevated Treasury Yields (up from 2.1% to 3.75% in past six month), one of two things will happen. Either…

1. Treasury Yields will have to go up even more.
2. Foreigners will NOT fund our U.S. Deficits. This will open the door for the Fed to purchase more U.S. Treasuries, and it means the Fed will print more cash to do so.

Both of these outcomes do not bode well for the U.S. and the U.S. Dollar, if this trend is to persist. Only time will tell us if April data was the odd month or if it was the sign of times to come.