Flows

In some of this morning's analysis w/r/t our discussion yesterday...

* The net EUR/$ equity flow is Euro supportive currently mainly due to US
buying in Euroland, the same is happening with US investors buying
Japan. Net government bond flows are also US$ bearish both with
Euroland and with Japan, the latter due to strong signs of Japanese
repatriation still.
* All this backs up what seemed a peculiar weakening of the US$
yesterday. For the remainder of the year the big question for the Dollar is
will foreigners want to add to their holdings of US assets when they
already hold 11% of the US equity market, 21% of corporate bonds and
36% of the Treasury market?
* We know that the there is likely to be net FDI outflow from the US in
2003,
with our pipelines suggesting a net US$46.2bn pending outflow currently
the worst it has been for many years. It is noteworthy that FDI has funded
around a third of the US current account deficits over the last 3 years, as
important as, net equity inflow.