Japanese Holdings Of US Treasuries Hit Record Highs, China Big Buyer Too

The Treasury’s report on cross-border capital flows showed total foreign ownership of Treasuries rose $209.7 billion from January, to $7.067 trillion with Japan, UK, Hong Kong, and China the biggest buyers in February (ahead of the main virus impacts).

The breakdown is as follows:

• Foreign net buying of Treasuries at $4.9b

• Foreign net buying of equities at $11.5b

• Foreign net selling of corporate debt at $20.5b

• Foreign net buying of agency debt at $39.4b

In Treasury-land, China bought $13.7 billion of US Treasuries in February – the most since August 2017 – to the highest level since Oct 2019…

Source: Bloomberg

But Japan bought over $56 billion – near a record monthly purchase – for the second month in a row, pushing Japanese holdings to record highs at $1.27 trillion…

Source: Bloomberg

With Japan now dominating China as America’s largest creditor…

Source: Bloomberg

The UK Was also a massive buyer of Treasuries – adding $30.5 billion to a record $403 billion overall…

Source: Bloomberg

On the downside, Korea (-$5bn), Thailand (-$4.7bn), and UAE (-$2.5bn) were the biggest sellers of Treasuries in February.

As Bloomberg notes however, the release largely pre-dates the global spread of Covid-19, and while China was already feeling its toll with much of the population under quarantine, economic data had yet to show the hit to growth. Next month’s update could show more volatility, judging by the Fed’s report of a record $109 billion drop in custody holdings over March.