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June 17, 2015

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US debt holdings slip for 1st time since October

FOREIGN holdings of US Treasury securities fell in April, the first setback since October.

Total holdings slipped to US$6.14 trillion, down 0.6 percent from the record level of US$6.18 trillion in March, the Treasury Department reported.

China, the No. 1 foreign holder of US government debt, boosted its holdings a slight 0.2 percent to US$1.26 trillion in April following a 3 percent rise in the previous month. The big March advance allowed China to regain the top spot in foreign ownership of Treasury securities after having relinquished the No. 1 ranking in February.

Japan, which had briefly surpassed China, trimmed its holdings by 0.9 percent in April to US$1.22 trillion. It remained in second place.

Demand for US government debt is expected to remain strong this year.

February marked the first time that Japan had been in the top spot since August 2008 when China overtook Japan as the largest foreign owner of Treasury securities.

Foreign central banks have been increasing their holdings of US government debt. In April, their holdings rose a modest 0.1 percent to US$4.13 trillion. That represents 67 percent of total foreign holdings.

US Treasury securities are considered a super-safe investment and are viewed as a safe haven during times of turbulence in other markets.

Investors are also looking for US interest rates to begin rising at a gradual pace once the Federal Reserve begins to boost a key short-term interest rate which it has held at a record low near zero since late 2008.


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