U.S. investors stock up on Treasuries


NEW YORK -- Individual American investors bought a recor $120.5 billion worth of Treasury securities last year, according to data from the Federal Reserve Board.

The purchases by individuals came to nearly 45 percent of the $272 billion in securities issued in 1990 to finance the budget deficit.

"That is an eye-opening number," said William M. Brachfeld, executive vice president at Daiwa Securities America. "But in the aggregate, individuals are more intelligent making investment decisions than the professionals who manage money. And there were lots of good reasons to be in high-quality securities last year."

The Fed's numbers showed that household purchases of Treasury securities were biggest in the first and fourth quarters of the year as depositors appeared to shift money out of savings accounts and other bank instruments at times of marked concern about the stability of the financial system.

Fears about the savings and loan industry heightened during the first quarter. And in the fourth quarter, concern about the health of some big banks added to the nervousness of investors after Saddam Hussein invaded Kuwait.

"The first and fourth quarters were periods when the backdrop was unsettled, and concerns about the financial system were at their height," said Neal M. Soss, chief economist at the First Boston Corp.

For a year at least, the Fed's numbers put to rest the notion that strong demand from foreigners was required to sell Treasury securities.

Attracted by higher interest rates elsewhere, foreign purchases of Treasury issues were essentially flat last year, compared with the levels for 1989, at around $30 billion. That level is down sharply from 1988, when foreigners bought $62 billion.

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