China boosts US Treasury stake
June 16, 2010, Wednesday
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Print Edition
Print Edition
CHINA boosted its holdings of US Treasury debt in April for the second straight month as total foreign holdings of US government debt increased.
China's holdings of US Treasury securities rose by US$5 billion to US$900.2 billion in April, the Treasury Department said yesterday. Total foreign holdings rose by US$72.8 billion to US$3.96 trillion.
The sizable gains are being driven by fears that Greece and other European governments could default on their debt. Worry of possible defaults has sparked a flight to safety and that has benefited US Treasury securities. Treasurys are considered the world's safest investment - the US government has never defaulted on its debt.
The April increases should also ease concerns that lagging foreign demand will force the US government to pay higher interest rates to finance its debt.
China is the largest foreign holder of Treasury securities. The monthly gains in March and April came after six consecutive months when China was either reducing its US holdings or keeping them constant. The stretch raised concerns that China might shift money away from Treasury securities.
The 1.9 percent rise in total holdings of US debt in April followed an even bigger 3.5 percent increase in March.
The Treasury said that net purchases of long-term securities, covering US government debt and the debt of US companies, increased by US$83 billion in April. That follows a record monthly gain of US$140.5 billion in March.
The higher interest in US bonds has helped push interest rates lower. It's a welcome development for the US government, which must finance record federal budget deficits. The federal deficit hit an all-time high of US$1.4 trillion last year. It is expected to remain above US$1 trillion this year and in 2011 as well.
Japan, the No. 2 foreign holder of Treasury securities, also increased its holdings in April. Other countries registering gains in their holdings in April were Britain and various oil exporting nations.
China's holdings of US Treasury securities rose by US$5 billion to US$900.2 billion in April, the Treasury Department said yesterday. Total foreign holdings rose by US$72.8 billion to US$3.96 trillion.
The sizable gains are being driven by fears that Greece and other European governments could default on their debt. Worry of possible defaults has sparked a flight to safety and that has benefited US Treasury securities. Treasurys are considered the world's safest investment - the US government has never defaulted on its debt.
The April increases should also ease concerns that lagging foreign demand will force the US government to pay higher interest rates to finance its debt.
China is the largest foreign holder of Treasury securities. The monthly gains in March and April came after six consecutive months when China was either reducing its US holdings or keeping them constant. The stretch raised concerns that China might shift money away from Treasury securities.
The 1.9 percent rise in total holdings of US debt in April followed an even bigger 3.5 percent increase in March.
The Treasury said that net purchases of long-term securities, covering US government debt and the debt of US companies, increased by US$83 billion in April. That follows a record monthly gain of US$140.5 billion in March.
The higher interest in US bonds has helped push interest rates lower. It's a welcome development for the US government, which must finance record federal budget deficits. The federal deficit hit an all-time high of US$1.4 trillion last year. It is expected to remain above US$1 trillion this year and in 2011 as well.
Japan, the No. 2 foreign holder of Treasury securities, also increased its holdings in April. Other countries registering gains in their holdings in April were Britain and various oil exporting nations.
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