By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – Foreign holdings of U.S. Treasuries rose to an all-time peak in July, data from the Treasury Department showed on Thursday, hitting record highs for a third straight month, led by gains in holdings from Japan and the United Kingdom.
Holdings of U.S. Treasuries surged to $9.159 trillion in July, up from $9.126 trillion the previous month. Compared with a year earlier, Treasuries owned by foreigners were up nearly 9%.
China’s holdings of Treasuries, on the other hand, dropped to $730.7 billion, its lowest since December 2008 when the world’s second-largest economy held $727.4 billion.
The country’s reduction of its U.S. Treasury holdings has been a gradual process over the past decade, driven by both strategic and market factors. Strategically, China has been seeking to reduce reliance on the U.S. dollar in reserves, trade settlement and investment.
At the same time, China has been gradually unloading Treasuries to bolster its currency, the yuan. Analysts said a slowing Chinese economy, post-COVID challenges, and trade barriers have diminished China’s inflows from exports.
Japan remained the largest non-U.S. holder of Treasuries with $1.151 trillion, its biggest holdings since March 2024.
UK investors, the second-largest owner of U.S. government debt, increased their holdings of Treasuries to another record just under $900 billion, up roughly 5% from the $858 billion in June.
On a transaction basis, the U.S. recovered from Treasury debt outflows in June to post $58.2 billion in foreign inflows in July. In May, there were foreign inflows of $147.4 billion in Treasuries, the largest since August 2022.
Foreign investors sold U.S. equities in July to the tune of $16.3 billion. That followed massive equity inflows of $163.1 billion in June.
Data also showed that the net capital inflow into the United States totaled just $2.1 billion in July, down from a revised inflow of $92 billion in June.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Daniel Wallis and Nia Williams)
Comments