The Treasury International Capital (TIC) system collects data on cross-border transactions of US securities and financial instruments. It is used as an economic indicator but primarily for balance of payments analysis. The data covers short and long-term securities, but foreign ownership of US stocks is less common. TIC only measures cash flows related to portfolio management and position trading. The data is cited in many government reports, including the US Bureau of Economic Analysis and the US Federal Reserve Board’s flow of funds accounts.
The Treasury International Capital (TIC) system is a series of statistical reports prepared by the US Department of the Treasury. Monthly and quarterly reports document transactions between US sellers and foreign buyers of US securities and financial instruments. The data is collected from a select group of financial organizations and reflects transactions whose amounts exceed a minimum level. Treasury International Capital ratios are often used as an economic indicator by investors; however, the process is primarily intended to collect relevant data for balance of payments analysis (BOP).
The US participant in a transaction can be any entity located in the United States, including branches and subsidiaries of foreign companies. This includes organizations incorporated in the United States even if they do not maintain a physical presence in the country. With the BOP in mind, a US branch of a foreign company would be resident, but a foreign branch of a US company would not. Transactions involving US securities between non-resident entities are not part of Treasury International Capital reporting. Since US stocks are heavily traded in financial markets around the world, the TIC data will not reflect a large number of transactions that do not affect the BOP.
A range of data, including cross-border trading in both short-term and long-term securities, which mature in more than one year, is reported. Equity market instruments, such as stocks, derivatives and options, are covered by Treasury International Capital’s monthly and quarterly reports. However, foreign ownership of US stocks is much less common than ownership of US debt. TIC data therefore has a greater influence on the Treasury and corporate bond markets, which are more directly influenced by interest rates and the value of the dollar.
The Treasury International Capital system only measures cross-border cash flows related to portfolio management and position trading. Direct investment in a US resident company by a foreign entity to exercise an ownership interest is registered by the US Department of Commerce. Cross-border US government capital transactions are also excluded from the TIC data, although they are part of the Department of Commerce balance of payments reports.
TIC data is cited in many other government reports. The United States Bureau of Economic Analysis (BEA) publishes the United States’ International Transaction Accounts and International Investment Position. Both of these reports rely heavily on data from Treasury International Capital. The BEA publications in turn form the basis for the US Federal Reserve Board’s flow of funds accounts of the US World Financial Flows subsection.
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