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Treasury International Capital

From The Free Forex Encyclopedia

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Definition

The Treasury International Capital data is a set of reports that shows all flows of money into and out of the country for stocks and bonds. It is computed by getting the difference in value between foreign purchases of stocks and bonds and the value of stocks and bonds sold by a country. If the TIC balance is positive, it means that more securities were sold than purchased by the nation.

Another name for the report is Net Foreign Purchases.

Importance

Demand for a nation’s securities is directly linked for the demand for that nation’s currency because the purchase of bonds and stocks require investors to buy the domestic currency. For example, foreign investors must first convert their money into US dollars in order to buy US stocks and bonds.

Market Impact

The TIC flows report usually has a high market impact on its release. Traders generally view a surplus in TIC flows as positive for the domestic currency because large government holdings of a nation’s currency show confidence in that currency. On the other hand, a deficit tends to be interpreted as bad for the domestic currency because it could mean that not enough money is coming in to fund government spending.

The TIC Makes the Dollar Tick!