International demand for U.S. financial assets cooled in December amid optimism Europe would resolve its debt crisis. Net buying of long-term equities, notes and bonds totaled $17.9 billion during the month compared with net purchases of $61.3 billion the previous month, the Treasury Department said today in Washington. Including short-term securities such as stock swaps, foreigners bought a net $87.1 billion in December compared with net buying of $42.9 billion the previous month. The December decline in foreign demand for U.S. assets reflects “in large part the improvement in the global economic outlook and risk sentiments during that period,� Millan Mulraine, a senior U.S. strategist at TD Securities in New York, said before the report. “Notwithstanding this, with concerns about a disorderly Greek default continuing to linger. We expect the flight to quality to continue to play a big role in maintaining a healthy appetite for U.S. Treasuries among global investors.� U.S. Treasuries finished 2011 with the biggest annual return since the depths of the financial crisis in 2008 as Europe’s debt turmoil spurred investor demand for refuge even as Standard & Poor’s cut America’s credit rating. U.S. 10-year note yields ended 2011 within a quarter-percentage point of a record low while data showed the U.S. economy was strengthening. European leaders are torn between pouring more aid into Greece’s struggling economy or risking an unprecedented national bankruptcy that might force the country out of the euro. A euro area finance ministers meeting was canceled late yesterday and replaced with a conference call at 5 p.m. Brussels time. On March 20 Greece must come up with 14.5 billion euros for a bond redemption or possibly become the first country in the euro’s 13-year history to default. Corporate Debt The Treasury Department data capture international purchases of government notes and bonds, stocks, corporate debt and other securities. Five economists surveyed by Bloomberg News had estimated net buying of $45 billion of long-term assets, according to the median estimate. Their estimates before the report ranged from net buying of $20 billion in long-term assets to $72 billion. To contact the reporters on this story: Meera Louis in Washington at mlouis1@bloomberg.net To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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