Japan Firmly Holds First Place, UK Continues to Increase
According to the Treasury International Capital (TIC) report released by the U.S. Department of the Treasury on June 18, in April 2025, among the world's major creditors, Japan increased its holdings of U.S. Treasuries by $3.7 billion to $1.1345 trillion, firmly maintaining its first place. The UK significantly increased its holdings by $28.4 billion to $807.7 billion, continuing to rank second.
China Continues Reduction Trend
In April, China reduced its holdings of U.S. Treasuries by $8.2 billion, bringing the total to $757.2 billion, yet it remains the third-largest foreign holder of U.S. debt. This marks the second consecutive month of reductions by China. Previously, in March, China reduced its holdings by $18.9 billion, whereas in January and February, it increased its holdings by $1.8 billion and $23.5 billion, respectively.
Over a longer timeline, since April 2022, China's holdings of U.S. Treasuries have not returned to over $1 trillion, showing a gradual declining trend. Between 2022 and 2024, China reduced its holdings by approximately $281.3 billion, amounting to $173.2 billion, $50.8 billion, and $57.3 billion respectively.
In the Midst of U.S. Treasury Market Turmoil, Capital Outflows Intensify
April saw significant fluctuations in the U.S. Treasury market. The TIC report indicates that during the month, the net outflow of all foreign investments in U.S. long-term, short-term securities, and bank cash flow totaled $14.2 billion.
Among these, foreign private funds registered a net inflow of $3.1 billion, but official funds saw a net outflow of as much as $17.3 billion. Additionally, foreigners sold off $50.6 billion worth of U.S. long-term securities, significantly higher than March's net purchase of $183.2 billion. After adjustments for factors such as stock swaps and others, foreigners sold a net of $7.8 billion in U.S. long-term securities in April, reflecting a rise in market risk aversion.
Geopolitical and Monetary Policy Impacts Persist
The current uncertainties in U.S. tariff policies, changes in the Federal Reserve's interest rate trajectory, and global geopolitical tensions could be key considerations for foreign investors reducing their U.S. Treasury holdings.
While the increases by Japan and the UK reflect long-term confidence in U.S. credit, the ongoing reductions by some creditor nations, including China, may indicate a cautious attitude towards the prospects of the U.S. Treasury in global capital markets.
