WASHINGTON: Foreign demand for US Treasury securities rose to a record level in July and China increased its holdings after two months of declines.
The Treasury Department says total foreign holdings rose 0.7 percent in July to a record $ 5.35 trillion.
China, the largest foreign holder of Treasury debt, boosted its holdings to $ 1.15 trillion, up 0.2 percent from June. Japan, the second-largest buyer of Treasury debt, increased its holdings 0.6 percent to $ 1.12 trillion.
Demand for US debt is rising in part because investors are worried about Europe's debt crisis and its impact on the global economy. "With choppy financial markets and volatility in Europe, which were both widespread in July, private investors abroad purchased more Treasuries than any other asset class in July," said Jay Bryson, global economist at Wells Fargo.
US government debt is considered one of the world's safest investments. Moody's, however, has warned it could lower America's top credit rating if Congress fails to reach a budget deal later this year.
Gregory Daco, senior US economist at IHS Global Insight, predicted that foreign demand for Treasury debt would remain strong in coming months, in part because the US economy will be doing better than Europe.
The report showed that holdings of Treasury debt by foreign governments increased 0.6 percent in July to $ 3.86 trillion. Foreign governments, including foreign central banks, account for 72 percent of the foreign ownership of US Treasury securities.
Meanwhile, the US current account trade deficit narrowed in the April-June period, pushed lower by an increase in American exports and cheaper oil imports.
The Commerce Department said Tuesday that the deficit in the current account decreased 12.1 percent to $ 117.4 billion in the second quarter. That's down from a deficit of $ 133.6 billion in the January-March quarter, which had been the largest in three years.
The current account is the broadest measure of trade. It tracks the sale of merchandise and services between nations as well as investment flows. Economists watch the current account as a sign of how much the United States needs to borrow from foreigners.
Many economists predict it will widen again in coming quarters. A global slowdown has dampened demand of for US exports. And oil prices are rising again, in part because of increased Middle East tensions.
Europe's debt crisis has pushed much of the region into recession. The region accounts for about one-fifth of US export sales. And other major export markets, including China, India and Brazil, have experienced slower growth.
The current account deficit hit an all-time high of $800.6 billion in 2006. It then shrank after a deep recession reduced US demand for foreign goods by a greater amount than US export sales were dampened. The trade gap began widening again after the recession ended in June 2009.
The economy grew at an anemic annual rate of 1.7 percent in the April-June quarter and job growth has been disappointing.
That prompted the Federal Reserve last week to announce new efforts aimed at boosting the economy and combatting high unemployment. The Fed on Thursday said it buy an average of $ 40 billion a month in mortgage bonds to try to lower long-term interest rates lower and stimulate the economy. The Fed said it will keep buying bonds until the economy and job market show significant improvement.
In the April-June quarter, deficit in goods sold shrank to $ 185.8 billion, down from a deficit of $ 194.3 billion in the first quarter. US exports rose 1.4 percent to $ 394.1 billion. Sales of farm products, led by a sharp rise in exports of soybeans, drove exports higher. Imports fell 0.5 percent to $ 579.9 billion, reflecting a drop in petroleum imports.
The US surplus in services increased 1.3 percent to $ 46.5 billion. The gain was due to stronger US overseas sales of financial services, business and professional services and higher royalties to US companies.
The surplus in investment income increased 0.8 percent to $ 184.6 billion in the second quarter, reflecting higher interest and dividend payments earned by US investors on their overseas holdings.
Net unilateral transfers, a category, which includes foreign aid payments, rose 2.7 percent to $ 33.6 billion in the second quarter.
The various changes left the current account deficit at 3 percent of the total economy, down from 3.5 percent in the January-March quarter.
FROM: THE ASSOCIATED PRESS
Foreign holdings of US debt rise to record $ 5.35 trillion
Foreign holdings of US debt rise to record $ 5.35 trillion
AI will never replace human creativity, says SRMG CEO
- Speaking to Maya Hojeij, senior business anchor at Asharq with Bloomberg, Jomana R. Alrashid expressed pride in SRMG platforms that had absorbed and adopted AI
RIYADH: Jomana R. Alrashid, CEO of Saudi Research and Media Group, highlighted how AI cannot replace human creativity during a session at The Family Office’s “Investing Is a Sea” summit at Shura Island on Friday.
“You can never replace human creativity. Journalism at the end of the day, and content creation, is all about storytelling, and that’s a creative role that AI does not have the power to do just yet,” Alrashid told the investment summit.
“We will never eliminate that human role which comes in to actually tell that story, do the actual investigative reporting around it, make sure to be able to also tell you what’s news or what’s factual from what’s wrong ... what’s a misinformation from bias, and that’s the bigger role that the editorial player does in the newsroom.”
Speaking on the topic of AI, moderated by Maya Hojeij, senior business anchor at Asharq with Bloomberg, the CEO expressed her pride in SRMG platforms that had absorbed and adopted AI in a way that was “transformative.”
“We are now translating all of our content leveraging AI. We are also now being able to create documentaries leveraging AI. We now have AI-facilitated fact-checking, AI facilities clipping, transcribing. This is what we believe is the future.”
Alrashid was asked what the journalist of the future would look like. “He’s a journalist and an engineer. He’s someone who needs to understand data. And I think this is another topic that is extremely important, understanding the data that you’re working with,” she said.
“This is something that AI has facilitated as well. I must say that over the past 20 years in the region, especially when it comes to media companies, we did not understand the importance of data.”
The CEO highlighted that previously, media would rely on polling, surveys or viewership numbers, but now more detailed information about what viewers wanted was available.
During the fireside session, Alrashid was asked how the international community viewed the Middle Eastern media. Alrashid said that over the past decades it had played a critical role in informing wider audiences about issues that were extremely complex — politically, culturally and economically — and continued to play that role.
“Right now it has a bigger role to play, given the role again of social media, citizen journalists, content creators. But I also do believe that it has been facilitated by the power that AI has. Now immediately, you can ensure that that kind of content that is being created by credible, tier-A journalists, world-class journalists, can travel beyond its borders, can travel instantly to target different geographies, different people, different countries, in different languages, in different formats.”
She said that there was a big opportunity for Arab media not to be limited to simply Arab consumption, but to finally transcend borders and be available in different languages and to cater to their audiences.
The CEO expressed optimism about the future, emphasizing the importance of having a clear vision, a strong strategy, and full team alignment.
Traditional advertising models, once centered on television and print, were rapidly changing, with social media platforms now dominating advertising revenue.
“It’s drastically changing. Ultimately in the past, we used to compete with one another over viewership. But now we’re also competing with the likes of social media platforms; 80 percent of the advertising revenue in the Middle East goes to the social media platforms, but that means that there’s 80 percent interest opportunities.”
She said that the challenge was to create the right content on these platforms that engaged the target audiences and enabled commercial partnerships. “I don’t think this is a secret, but brands do not like to advertise with news channels. Ultimately, it’s always related with either conflict or war, which is a deterrent to advertisers.
“And that’s why we’ve entered new verticals such as sports. And that’s why we also double down on our lifestyle vertical. Ultimately, we have the largest market share when it comes to lifestyle ... And we’ve launched new platforms such as Billboard Arabia that gives us an entry into music.”
Alrashid said this was why the group was in a strong position to counter the decline in advertising revenues across different platforms, and by introducing new products.
“Another very important IP that we’ve created is events attached to the brands that have been operating in the region for 30-plus years. Any IP or any title right now that doesn’t have an event attached to it is missing out on a very big commercial opportunity that allows us to sit in a room, exchange ideas, talk to one another, get to know one another behind the screen.”
The CEO said that disruption was now constant and often self-driving, adding that the future of the industry was often in storytelling and the ability to innovate by creating persuasive content that connected directly with the audience.
“But the next disruption is going to continue to come from AI. And how quickly this tool and this very powerful technology evolves. And whether we are in a position to cope with it, adapt to it, and absorb it fully or not.”
