Foreign holdings of US Treasuries slipped $72 billion in June, to $9.299 trillion from $9.371 trillion in May, according to Treasury Department data released this week. The three largest non-US holders — Japan, the UK, and China — drove the pullback, even as total foreign holdings remained up 2.3% from a year earlier.
Japan’s holdings fell 2.3% to $1.116 trillion, down $26.4 billion from $1.143 trillion in May — still the largest non-US position by a wide margin, though well off the $1.325 trillion peak it hit in November 2021.
The pullback traces to a specific mechanism — Tokyo selling dollars to prop up a weakening yen, with some of those dollar sales funded by unloading Treasury holdings. Washington got involved too — last month, Treasury Secretary Scott Bessent said the US and Japan would intervene jointly to support the currency.
Sponsored · Selkirk Copper Mines
Pioneer Investments strategist Paresh Upadhyaya agreed intervention was the clear driver behind Japan’s move. He also pointed to an option Tokyo has left open — tapping the Federal Reserve’s repo facility to raise dollars by pledging Treasuries as collateral rather than selling them outright — which he said could make further large-scale Treasury sales from Japan less likely going forward.
The UK trimmed its position 1%, to $939.9 billion from $948.6 billion. London’s role as a global securities custodian means the figure doesn’t necessarily reflect British investors — traders elsewhere often route Treasury purchases through UK-based accounts, which is why analysts watch the number as a rough gauge of hedge fund activity.
China’s pullback was the steepest of the three. Holdings fell from $659.3 billion to $633.4 billion over the month — a 4% drop that leaves China at its lowest Treasury position since September 2008, when Lehman Brothers filed for bankruptcy. China remains the third-largest non-US holder, and its June total is down more than 13% from a year earlier.
Related: QE time? US Treasury doubles long-term bond buybacks to $4 billion
This is the third monthly pullback in four months — foreign holdings hit a record high back in February and have struggled to hold that level since. The pullback looks specific to Treasuries rather than a broader retreat from US assets — both corporate bonds and equities continued to draw positive inflows in June, with equities in particular jumping to $181.4 billion from $134.6 billion.
The West Needs To Level The Playing Field To Compete With China
Access to the raw materials of the new green economy is increasingly a high-stakes chess...