The U.S. Department of the Treasury released data on October 16th showing that foreign holdings of U.S. Treasury securities increased by over $83 billion in August, reversing the declining trend of the previous two months. However, China’s holdings continued to decrease.
The total amount of U.S. Treasury securities held by foreign entities has now reached $9.33 trillion.
Canada’s holdings increased by $38 billion in August, reaching a total of nearly $465 billion. Belgium also added nearly $20 billion, bringing its total holdings to around $491 billion. The increased holdings of these two countries were the main driving forces behind the growth of U.S. Treasury securities in that month.
The United Kingdom is the second-largest holder of U.S. Treasury securities, rising from $9.983 trillion in July to $10.09 trillion in August. This marks the first time the UK’s holdings have surpassed the $10 trillion mark.
However, the holdings of the other two major holders of U.S. Treasury securities decreased.
Japan, the largest foreign holder of U.S. Treasury securities, saw its holdings decrease by $36 billion in August, falling to $11 trillion, the lowest level since December 2024. The Japanese authorities intervened in the forex market earlier this summer, buying yen when the currency hit a forty-year low against the dollar. Data released last month showed that Tokyo sold some of its holdings of U.S. Treasuries and other securities.
China, the third-largest holder of U.S. Treasury securities, saw its holdings decrease by $27 billion in August, totaling $591 billion, a decrease of about 16% compared to the same period last year, hitting the lowest level since 2008.
China’s holdings of U.S. Treasury securities reached a peak of $13 trillion in 2013, but the current holdings have been slashed in half. Since the U.S. and Western countries froze Russia’s foreign exchange reserves in 2022, Beijing has been adjusting the structure of its own foreign exchange reserves, including selling off U.S. Treasury securities and increasing holdings of gold. Beijing is concerned that if U.S.-China relations deteriorate further, its holdings of U.S. Treasuries could also be frozen.
However, U.S. Treasuries are still considered a high-quality global asset. Some analysts believe that Beijing may indirectly hold some U.S. Treasuries through countries including Canada.
The data from the U.S. Treasury Department is based on custodial holdings, not ultimate beneficial ownership. In other words, as long as the bonds are held in the custody bank or brokerage account of a certain country, they will be recorded under that country’s name.