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Foreign holdings of US 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.
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Holdings of US Treasuries surged to US$9.159 trillion (HK$71.4 trillion) in July, up from US$9.126 trillion the previous month. Compared with a year earlier, Treasuries owned by foreigners were up nearly 9 percent.
China's holdings of Treasuries, on the other hand, dropped to US$730.7 billion, its lowest since December 2008 when the world's second-largest economy held US$727.4 billion.
The country's reduction of its US 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 US 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-US holder of Treasuries with US$1.151 trillion, its biggest holdings since March 2024.
UK investors, the second-largest owner of US government debt, increased their holdings of Treasuries to another record just under US$900 billion, up roughly 5 percent from the US$858 billion in June.
On a transaction basis, the US recovered from Treasury debt outflows in June to post US$58.2 billion in foreign inflows in July. In May, there were foreign inflows of US$147.4 billion in Treasuries, the largest since August 2022.
Foreign investors sold US equities in July to the tune of US$16.3 billion. That followed massive equity inflows of US$163.1 billion in June.
Data also showed that the net capital inflow into the United States totaled just US$2.1 billion in July, down from a revised inflow of US$92 billion in June.
Reuters
