Foreign holdings of Treasury bonds declined in January from record highs

Foreign holdings of Treasury bonds declined in January from record highs

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By José Adinolfi

The value of Treasury bonds held by foreign investors fell to $8.02 trillion at the end of January, according to Treasury data released Tuesday.

Foreign holdings of U.S. Treasuries fell in January from a record high in December as yields rose, eroding the value of government bonds.

Foreign investors held $8.02 trillion in Treasury bonds at the end of January, according to official Treasury Department data released Tuesday. That was down from $8.06 trillion in December, a record.

Among the three largest holders of Treasury bonds, Japan was the only one to increase its official reserve in January, and Japanese public and private sector investors increased their haul by $15 billion to $1.153 trillion.

Meanwhile, China and the United Kingdom saw their holdings of US Treasuries shrink: China's fell by $18.6 billion to $797.7 billion, while the United Kingdom's fell by about $200 million to $753.5 billion. millions of dollars.

Yields on long-term Treasury bonds and notes rose in January, with the 10-year yield BX:TMUBMUSD10Y rising 10.5 basis points to end the month at 3.965% as of 3 p.m. January, according to Dow Jones Market Data. .

Meanwhile, the yield on the 30-year Treasury bond BX:TMUBMUSD30Y rose 19.6 basis points to end the month at 4.216%. Short-term debt yields declined slightly in January, with the 2-year yield BX:TMUBMUSD02Y falling 2 basis points to 4.227%.

Yields, which move inversely to bond prices, have risen substantially along the Treasury curve since then. The 10-year yield stood at 4.296% as of 3:00 pm ET on Tuesday.

Official government data reflects bonds held in US-based escrow accounts, but these figures may not reflect the entirety of a country's Treasury holdings, as bonds could be held in escrow accounts with headquarters elsewhere.

See: Reports that China has been dumping Treasuries have been greatly exaggerated

For example, the Cayman Islands rank seventh among foreign buyers in terms of the amount of Treasury bonds; its holdings rose by more than $13 billion in January, to $319.7 billion. It is widely believed that the bulk of these bonds are held on behalf of investors based outside the small island nation.

The same applies to Belgium, where Euroclear is headquartered, and Luxembourg, where Clearstream is headquartered. Those two firms specialize in settlement and custody services, which involves storing securities for foreign clients. Luxembourg has the fourth largest volume of Treasuries after the United Kingdom; its offer increased by almost $6 billion in January, to $376.5 billion.

Foreign Treasury bond holdings continue to increase by 8.7% compared to January 2023.

-Jose Adinolfi

This content was created by MarketWatch, operated by Dow Jones & Co. MarketWatch is published independently of Dow Jones Newswires and The Wall Street Journal.

 

(END) Dow Jones News

03-19-24 1806ET

Copyright (c) 2024 Dow Jones & Company, Inc.

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