China's holdings of U.S. Treasuries skid to 12-year low; Japan also cuts holdings

[shockedcanadian]

FYI

Do NOT follow us...

China's holdings of U.S. Treasuries skid to 12-year low; Japan also cuts holdings

NEW YORK (Reuters) - China's holdings of U.S Treasuries tumbled in April to their lowest since May 2010, data showed on Wednesday, with Chinese investors likely cutting losses as Treasury prices fell after Federal Reserve officials signaled sizable rate hikes to temper soaring inflation.



Chinese holdings dropped to $1.003 trillion in April, down $36.2 billion from $1.039 trillion the previous month, according to U.S. Treasury Department figures. China's stock of Treasuries in May 2010 was $843.7 billion, data showed.


The reduction in Treasury holdings may also have been aimed at diversifying China's foreign exchange holdings, analysts said.


The Chinese sales contributed to a drop in overall foreign holdings of Treasuries in April that helped propel yields higher. U.S. benchmark 10-year Treasury yields started April with a yield of 2.3895%, and surged roughly 55 basis points to 2.9375% by the end of the month.


Japan's holdings of U.S. Treasuries fell further in April to their lowest since January 2020, amid a persistent decline in the yen versus the dollar, which may have prompted Japanese investors to sell U.S. assets to benefit from the exchange rate.

 

[Harpy Eagle]

So are foreign countries holding less of our debt a good thing or a bad thing?

People seem to not be able to make up their mind on this issue

 

[shockedcanadian]

So are foreign countries holding less of our debt a good thing or a bad thing?

People seem to not be able to make up their mind on this issue

It's more the broader implications and belief in U.S economy.

You should want NOT external debt in a perfect world, that ship sailed long ago. It's really about optics. I can't imagine the $4T+ that was spent in the last 18 months was a wise long term economic decision nor indicator.

There are pragmatic explanations due to the state of the global economy, but, coupled with a hike in rates, I can see how this would have a big impact on the market.

 

[Dekster]

So are foreign countries holding less of our debt a good thing or a bad thing?

People seem to not be able to make up their mind on this issue

It is generally a bad thing but mainly it is because they don't need as many dollars to buy oil these days. It could also be a sign that China's revenue is way down and they are cashing out to pay bills, which could in theory be a good thing from the competitive viewpoint.