The US Treasury Department announced yesterday that August saw a record net outflow of $69.3bn from US assets (equities, notes and bonds). This is particularly alarming considering that expectations had been for a $60bn inflow. The outflow was a combination of international investors selling US assets, and US investors buying international assets.
Perhaps most interesting of all was that Chinese investors decreased their holdings of US Treasuries by $8.8bn, while the Japanese reduced exposure to US assets by $24.8bn. Richard recently argued on this blog that a falling away of Asian support for US assets should cause the dollar to weaken.