Foreign holdings of US Treasuries increase for second month in December

“US Treasuries held by foreigners increased for a second consecutive month in December as yields started to decline from their peaks, becoming more attractive to offshore investors,” per the latest report from the US Treasury Department published on Wednesday reported Reuters.

Key quotes

Foreign holdings rose $7.314 trillion in December, up from $7.268 trillion in the previous month.

Treasury holdings in December, however, were 5.5% lower from the December 2021 level of $7.740 trillion.

Still, buying in both December and November paled in comparison to selling in October and September.

Japan remained the largest non-U.S. holder of Treasuries, with $1.076 trillion in December, down slightly from $1.082 trillion in the prior month.

Data also showed holdings of China, the second biggest non-U.S. holder of Treasuries, fell to $867.1 billion in December, from $870.2 billion in November.

China's holdings were the lowest since May 2010 when it had $843.7 billion.

Data also showed foreign inflows of $54.98 billion in US stocks in November, the largest since December 2020.

Market implications

The news backs the recent run-up in the US Treasury bond yields. That said, the US 10-year Treasury bond yields stay firmer around the six-week high, which in turn favors the US Dollar and weighs on the market sentiment.

Also read: Forex Today: US Dollar strength continues amid resilient American economy