US Treasury foreign holdings fall as China, Japan, and UK reduce positions

Foreign holdings of US Treasuries declined in June, with total foreign ownership falling to $9.299 trillion from $9.371 trillion in May. This shift was driven by a significant reduction in net Treasury inflows, which dropped from $56.6 billion in May to $6.8 billion in June.

The three largest foreign holders—Japan, the United Kingdom, and China—all reduced their positions. Japan, the largest holder, saw its holdings decrease by 2.3% to $1.116 trillion. The United Kingdom trimmed its position by approximately 1% to $939.9 billion.

China’s reduction was particularly notable, with holdings falling 4% in a single month to $633.4 billion. This represents the lowest level of Chinese Treasury holdings since September 2008. Factors contributing to these shifts include geopolitical tensions, such as US-Iran hostilities, and uncertainty regarding US Federal Reserve policy and fiscal sustainability.