Written by Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – Foreign holdings of U.S. Treasuries hit a record high in February, marking the fifth straight month of increases, Treasury data released on Wednesday showed.
Total holdings were $7.965 trillion, up from $7.945 trillion revised in January. Government bonds held by foreigners increased by 8.7% from the previous year.
Belgium had the largest increase in its holdings of US Treasuries, increasing by $27 billion to $320 billion. Japan, the largest holder of government debt outside the United States, increased its U.S. government debt to $1.167 trillion, the most since August 2022, when its holdings were $1.196 trillion.
The yen fell to a 34-year low of 154.79 yen to the dollar on Tuesday, as investors were wary of the threat that Japan would intervene in foreign exchange markets to boost the value of the yen.
The Bank of Japan intervened three times in 2022, as the yen fell toward a 32-year low of 152 yen to the dollar, first in September, and again in October to sell dollars and buy yen. I did it.
Japan’s government bond holdings in September and October 2022 decreased by $131.6 billion from $1.196 trillion in August.
China’s accumulation of U.S. debt also fell to $775 billion in February, data showed. The $22.7 billion monthly decline was the second largest among the 20 major countries on the Treasury list.
China, the world’s second-largest economy, has been shrinking in its holdings of U.S. debt, hitting $763.5 billion in February, the lowest level since March 2009.
Britain’s Treasury holdings totaled $700.8 billion, an increase of about $9 billion from January.
The benchmark 10-year Treasury yield began February at 3.863% and ended the month at 4.252%, an increase of nearly 39 basis points. Yields rose that month amid a slew of solid economic data, reflecting expectations that the U.S. Federal Reserve would delay rate cuts.
Data showed that capital flowed into major US asset classes during the month.
On a traded basis, U.S. Treasuries recorded inflows of $88.8 billion, up from $46.3 billion in January.
Foreign purchases of U.S. companies and agencies continued in February, with inflows of $52.7 billion and $3.7 billion, respectively.
Inflows into U.S. stocks were modest at $400 million, but outflows in January were $15.4 billion.
Net purchases of long- and short-term securities from abroad and net inflows from banking transactions totaled $51.6 billion in February, up from $30.8 billion in outflows the previous month, according to Treasury data.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Richard Chang)
