Asia Woes Push Trade Deficit Higher

Asia’s economic woes helped push the U.S. trade deficit sharply higher over the summer and early fall as Japanese firms, faced with deepening financial problems at home, sold off U.S. Treasury securities.

The Japanese went from net buyers of Treasury securities in the April-June quarter to become net sellers in July-September for the first time since late 1995, the Commerce Department said Wednesday.

“Japanese firms … are selling U.S. Treasury securities to shore up their wobbly balance sheets,” said economist Sung Won Sohn of Norwest Corp. in Minneapolis.

“According to Japanese accounting rules for foreign assets, the paper profit cannot be counted. … That’s why they have decided to sell, to book the profits.”

Japan’s central bank also is selling, to raise cash for loans to shaky financial institutions and businesses, Sohn said.