Discussion Paper

Recent Euro-area Inflows into U.S. Bonds: Reconciling and Understanding New Data Sources

Abstract: In this note we review the data on U.S. cross-border financial flows and positions with a focus on one question of current interest: have euro-area investors been increasing their holdings of U.S. securities since the possibility of European Central Bank quantitative easing (ECB QE) emerged in the latter half of 2014? The prospect of ECB QE, combined with the prospect of U.S. policy rate liftoff, suggested that U.S. interest rates would soon exceed euro-area rates by a wide margin, which might have provided an incentive for euro-area investors to seek higher-yielding U.S. assets, especially bonds. We note that, while some indicators suggest that financial flows from the euro area have been flat or even negative, our view is that the most reliable data indicate that euro-area purchases of U.S. bonds have strengthened, and were particularly strong in early 2015.

https://doi.org/10.17016/2573-2129.08

Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: IFDP Notes

Publication Date: 2015-06-19

Number: 2015-06-19-1