TIC Flows Decline on Credit Turmoil, Industrial Production Decelerates on GM Strike

- Net Long-term TIC Flows for August fell to -$69.3 Billion versus estimates of $60.0 Billion and $19.5 Billion in July.

- Industrial Production for September rose .1% versus estimates of a .1% gain and a downwardly revised 0.0% in August.

- Capacity Utilization for September was 82.1% versus estimates of 82.1% and 82.1% in August.

BOTTOM LINE: International investors sold a net $69.3 billion of US securities in August during the peak of the credit market turmoil, Bloomberg reported. The last decline was seen in 1998 during the Russian debt crisis in 1998. International demand for Treasuries fell by $2.6 billion, compared with a $9.4 billion drop the prior month. International holdings of US stocks fell a net $40.6 billion, compared to net purchases of $21.2 billion in July. I think this report was an aberration and expect to see a significant uptick in demand for US assets in September and October.

Industrial production in the US rose .1% in September, Bloomberg reported. The GM strike helped to production last month. Motor vehicle and parts production declined 3.3% versus a 1.6% decline the prior month. Manufacturing excluding vehicles and parts rose .3%. Production of computers and peripheral equipment increased .9%. Capacity Utilization is just slightly above the long-term average of 81.1. I expect industrial production to show acceleration this month.