Foreigners bought more U.S. debt in November

By Annalyn Censky, staff reporter

NEW YORK (CNNMoney) -- The United States dug deeper into debt with its foreign creditors in November, according to government records released Tuesday.

Foreign investors bought $93.9 billion in long-term Treasuries in November, increasing their net holdings after purchasing $56 billion the month before, the Treasury Department said Tuesday.

Treasuries are traditionally perceived to be low risk because they're backed by the U.S. government. The latest data signals that their safe-haven reputation has not deteriorated among the international investing community, despite the country's growing budget deficit.

"There still is pretty strong demand for U.S. securities from abroad," said Jim O'Sullivan, chief economist with MF Global. "The recovery is increasingly looking intact with growth picking up and inflation tame, so it does look like the financial crisis is behind us."

At the same time that foreigners increased the U.S. debt holdings, U.S. residents curbed their spending on foreign bonds. Americans bought $8.8 billion of long-term foreign securities in November, after buying $27.1 billion in October.

By taking the difference between the two figures, the Treasury Department calculates net foreign purchases totaled $85.1 billion in November.

Many economists say Europe's debt crisis has kept demand for U.S. debt strong.

"When worries about the European sovereign debt crisis reemerge, demand for safe-heaven U.S. Treasury securities surges," Gregory Daco, U.S. senior economist with IHS Global Insight said in a research note.

The largest lender to the U.S. remains China, which slightly decreased its holdings to $895.6 billion, down $11.2 billion from the month before. The report comes just before a state visit to the U.S. by Chinese President Hu Jintao. The creditor-debtor relationship between the two world superpowers is one of the largest factors complicating their trading relationship.

Japan is the next largest holder of Treasuries, and increased its holdings by $2.2 billion, to $877.2 billion in November. (See the Treasury Department's complete list)

Meanwhile, the price to buy U.S. debt fell slightly Tuesday, sending yields -- which move in the opposite direction -- higher.

The yield on the benchmark 10-year note rose to 3.36% from 3.33% Monday. The 2-year note rose to 0.59% and the 5-year note ticked up to 1.95%.

The 30-year bond rose to 4.57%. To top of page

The United States dug deeper into debt with its foreign creditors in November, according to government records released Tuesday.
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