The most recent data from the US Treasury has shown a shift in the holdings of US government bonds by three major foreign investors: Japan, China, and the UK. In September 2024, both Japan and China decreased their US Treasury holdings, while the UK actually increased its holdings.
Japan, maintaining its position as the largest foreign holder, reduced its holdings by $5.9 billion to a total of $1.1233 trillion. On the other hand, China, the second-largest foreign holder, lowered its holdings by $2.6 billion to $772 billion. This decline in China’s US Treasury investments has been a consistent trend since April 2022.
China’s pattern of decreasing its US Treasury holdings has been interspersed with occasional increases. Throughout 2024, China began the year by reducing its holdings in January, followed by further reductions in February and March. There was a slight uptick in April, but more reductions followed in May. June saw a significant increase of $11.9 billion, the largest for the year, but this was followed by reductions in July and August.
In contrast to Japan and China, the UK saw a substantial increase in its holdings in September, adding $20.8 billion to reach a total of $764.7 billion, placing it third among foreign holders.
The report from the US Treasury also highlighted a total net inflow of $398.4 billion into US securities from foreign sources in September. Of this amount, $341.1 billion came from private sources, while $57.3 billion came from official funds. Long-term US securities experienced a net purchase increase to $263.1 billion, with foreign private investors contributing $252.8 billion and official entities purchasing $10.3 billion. When adjusted for cross-border equity swaps, the net purchase of long-term US securities stood at $216.1 billion, nearly double the amount from the previous month.
It is important to note that while the data reveals interesting trends in the holdings of US Treasury bonds by foreign countries, individual investors should conduct their own research and analysis before making any investment decisions. As always, it is crucial to consider a diverse range of factors when evaluating investment opportunities.