NEW YORK: Foreign holdings of US Treasuries in August rose to their largest level since December 2021, data from the Treasury Department showed on Wednesday (Oct 18), rising for a third straight month.
Total holdings of US Treasuries climbed to US$7.707 trillion (RM36.55 trillion) in August from US$7.655 trillion the previous month. Compared with a year earlier, overseas holdings were up roughly 2.8%.
Japanese investors raised their stash of Treasuries to US$1.116 trillion from US$1.112 trillion in July. Their August holdings were the largest since April, rising for a third straight month.
Japan remains the largest non-US holder of US government debt.
“There is still buying coming through from foreign investors. As much as the market is fearing that foreign investors are stepping away, they haven’t actually,” said Gennadiy Goldberg, head of US rates strategy at TD Securities in New York.
“The bigger fear is that they can step away in the coming months especially as deficits increase and that is keeping a lot of investors nervous,” he added.
China’s holdings of Treasuries fell further to US$805.4 billion in August, the lowest since May 2009, when it had US$776.4 billion, data showed.
Some analysts said China could be under pressure to defend the weakening yuan, and selling off US debt may have been used for intervention purposes to support its currency.
“It’s unclear whether this was for currency purposes because Chinese reserves have not declined, which is odd,” Goldberg said.
“It’s really difficult to tell why their holdings are declining so much, but it could certainly be to stabilise the currency.”
The benchmark 10-year Treasury yield started August at 4.047%, ending the month at 4.019%.
Data further showed major US asset classes had inflows during the month.
On a transaction basis, US Treasuries posted inflows of US$22.1 billion in August, from an outflow of US$4.4 billion in July.
US equities had inflows of US$500 million, dropping from US$28.9 billion in July and US$120.4 billion in June.
Foreign buying of US corporates and agencies in August continued, with inflows of US$24.6 billion and US$14 billion, respectively.
Overall, foreign residents increased their holdings of long-term US securities in August; net purchases were US$61.3 billion, according to US Treasury data. – Reuters