The bronze seal of the Department of the Treasury is shown at the U.S. Treasury building in Washington, U.S., January 20, 2023. REUTERS/Kevin Lamarque/File Photo Acquire Licensing Rights
NEW YORK, Oct 18 (Reuters) – Foreign holdings of U.S. Treasuries rose to their highest level since December 2021 in August, Treasury Department data showed on Wednesday, rising for a third straight month.
The total value of U.S. Treasuries rose to $7.707 trillion in August from $7.655 trillion the previous month. Compared to the previous year, the stock of foreign farms increased by approximately 2.8%.
Japanese investors increased their holdings of government bonds to $1.116 trillion from $1.112 trillion in July. Their August resources were the highest since April and increased for the third month in a row.
Japan remains the largest non-US holder of US government debt.
“They are still buying from foreign investors. While the market is concerned that foreign investors will withdraw, that has not actually happened,” said Gennadiy Goldberg, head of U.S. interest rate strategy at TD Securities in New York.
“The bigger concern is that they could pull back in the coming months, especially as deficits rise, which worries many investors,” he added.
According to the data, holdings of Chinese government bonds fell again to $805.4 billion in August, the lowest level since May 2009, when it was $776.4 billion.
Some analysts say China could come under pressure to defend the weakening yuan and the sell-off of US debt could be used for intervention purposes to support its currency.
“It’s unclear whether this was for currency purposes because China’s reserves haven’t dropped, which is strange,” Goldberg said.
“It’s really hard to say why their holdings are declining so much, but it could certainly be a sign that the currency is stabilizing.”
The yield on 10-year Treasury bonds started in August at 4.047% and ended the month at 4.019%.
The data further showed that major US asset classes showed inflows during the month.
On a transaction-based basis, U.S. Treasuries saw inflows of $22.1 billion in August compared with an outflow of $4.4 billion in July.
$500 million flowed into U.S. stocks, down from $28.9 billion in July and $120.4 billion in June.
Foreign purchases by American corporations and agencies continued in August, with the inflow of funds amounting to $24.6 billion and $14 billion, respectively.
Overall, foreign residents increased their exposure to long-term U.S. securities in August; According to data from the US Treasury, net purchases amounted to $61.3 billion.
Reports by Gertrude Chavez-Dreyfuss; editing: Jonathan Oatis and David Gregorio
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