Data published during the 43 day shutdown of the Treasury Department shows that foreign holdings of U.S. Treasuries fell in September for the first time in six months. The October data is expected to be released on December 18, thus the modest decline occurs before the next update.
U.S. Treasuries held by foreign investors totaled $9.249 trillion in September, slightly less than $9.262 trillion in August. Overall holdings were nevertheless 5.5% larger than they were during the same time last year, notwithstanding this monthly decline.
With $1.189 trillion in September the highest amount since August 2022 Japan continued to be the biggest foreign buyer of US Treasury bonds.
For nine months in a row, its holdings have increased gradually, demonstrating the high demand from Japanese investors.
China's holdings decreased from $701 billion in August to $700.5 billion in September. Its holdings reached their lowest point since October 2008 in July, at $696.9 billion.
China's efforts to diversify away from the US currency, support the yuan in the face of declining export inflows, and handle the pressures of a slowing economy and post COVID problems are all reflected in this long term decline.
Additionally, the UK reduced its exposure by lowering its holdings of US Treasury bonds from $904.3 billion in August to $865 billion in September. The UK is still one of the biggest foreign holders in US debt, despite the drop.
Treasury purchases by foreign buyers fell precipitously from $48.5 billion in August and $44.6 billion in July to $25.5 billion in September. In comparison, inflows reached $147.4 billion in May, the highest level since August 2022.
In September, foreign investors bought $132.9 billion worth of stocks, greatly increasing their exposure to U.S. equities. This represented a significant improvement over the $16.2 billion in outflows reported in July and a significant increase from $89.4 billion in August.
With net inflows increasing to $190.1 billion in September, little more than August's $187.1 billion, overall capital flows into the United States remained strong. This comes after a brief setback in July, when the United States reported a $6.6 billion net outflow.
