TIC shows no big foreign bid for US equities through Q2
Contrary to anecdotal reports which supported the dollar in June, the data continued to show no evidence of substantial asset allocation in favour of US equity markets—if fact, foreign investors were heavy sellers of US stocks on the month, unloading $25bn in US equities even as US investors continued to buy foreign stocks (see chart). The data suggests that the USD rally in Q2 was much more about anticipating future flows than a real improvement in the USD’s structural underpinnings, and the USD’s struggles in Q3 probably reflect this. We still expect the USD to recover and do well in Q3 but the dollar will need US yield support for this to happen in the absence of big equity flows.
Read the full report: FX Daily
BNP Paribas