China increases holdings of Treasuries in July, Japan cuts holdings, US Treasury Department data shows


Signage is seen at the headquarters of the United States Treasury Department in Washington, DC, U.S., August 29, 2020. REUTERS/Andrew Kelly

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NEW YORK, Sept 16 (Reuters) – China increased its holdings of Treasuries in July for the first time in eight months, while Japan reduced its U.S. government debt, U.S. Treasury Department data showed on Friday. .

China’s treasury bill reserve rose to $970 billion in July from $967.8 billion in June, the lowest since May 2010, when it was $843.7 billion.

Japan, on the other hand, reduced its holdings of Treasury debt to $1.234 trillion in July from $1.236 trillion the previous month. Japan remains the largest non-US holder of Treasuries.

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The fall in Japan’s holdings was more or less in line with movements in the currency market. The yen strengthened in July against the greenback, ending the month at 131.6 yen to the dollar, from 135.22 yen at the start.

The yen’s sharp fall against a booming dollar this year has raised the prospect of Japanese intervention in the market to boost the Japanese currency. Since the start of 2022, the yen has fallen 19.5% against the dollar.

Overall, foreign holdings of Treasury bills reached $7.501 billion in July, from $7.430 billion in June.

On a transaction basis, US Treasuries recorded net foreign capital inflows of $23.12 billion in July, compared with $58.9 billion the previous month. US Treasuries saw inflows of foreign capital for a third consecutive month.

Inflows generally followed price movements in the Treasury bill market. The benchmark 10-year Treasury yield started July at 2.904% and ended the month at 2.642%.

In other asset classes, foreigners sold U.S. stocks in July for a seventh consecutive month for $60.32 billion, compared with outflows of $25.36 billion in June. The July release was the biggest since March.

US corporate bonds saw July inflows of $8.78 billion, down slightly from June’s $13.99 billion. Foreigners have been net buyers of US corporate bonds for seven consecutive months.

Treasury data also showed that U.S. residents again sold their holdings of long-term foreign securities, with net sales of $27.2 billion, compared with sales of $50.5 billion in June.

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Reporting by Gertrude Chavez-Dreyfuss Editing by Chris Reese and Jonathan Oatis

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