US Net Inflows Surge in October, Equity Buys Up

Net overall capital inflows into the United States surged to $97.8 billion in October from a revised $32.8 billion outflow in September, the Treasury Department said Monday.

October's inflows were more than sufficient to cover the month's U.S. trade deficit of $57.8 billion.

Net long-term capital inflows totaled $114.0 billion, from a revised $15.4 billion inflow in September Investments during the month were boosted by a turnaround in private inflows to $56.2 billion, from an outflow of $46.2 billion in September.

"These numbers were better overall, and I guess we're back to trend," said Shaun Osborne, chief currency strategist at TD Securities in Toronto.

"The weakness we saw in inflows earlier had something to do with the market volatility over the summer. Overall, this underpins demand for the U.S. dollar, which could perform a little better against the euro and yen," Osborne added.

The dollar briefly extended gains against the euro following the report.

Equity purchases were particularly strong, with foreigners buying $30.2 billion in October, from $2.6 billion the previous month.

Foreigners snapped up a net $49.8 billion of U.S. Treasuries, from $26.2 billion billion in September.

Japan was still the largest holder of U.S. Treasuries, with $591.8 billion during the month, up slightly from $582.0 billion previously. China, meanwhile, pared its Treasury holdings to $388.1 billion from $396.7 billion.