Foreign Holdings of U.S. Treasuries Hit Record $9 Trillion in March Amid Rising Global Demand
Foreign holdings of U.S. Treasury securities reached an all-time high of $9.05 trillion in March, according to the U.S. Treasury Department. This marked the third consecutive monthly increase and reflected strong international demand for U.S. government debt, which rose by over $233 billion from February and nearly 12% year-over-year. The surge occurred a few months after President Donald Trump took office, during a period of relative economic optimism.
However, the positive trend could face headwinds. In early April, the Trump administration introduced a significant trade shock, raising effective tariffs, especially on Chinese imports. This sparked a sell-off in U.S. Treasuries that drove the 10-year yield up by over 70 basis points to nearly 4.6%. Analysts suggest that foreign investors may have contributed to the sell-off, expressing concern over increased economic and policy uncertainty.
Despite this, Japan retained its position as the largest foreign holder of U.S. Treasuries, increasing its holdings to $1.13 trillion in March. Meanwhile, the UK overtook China as the second-largest holder with $779 billion, a position typically associated with custodial accounts used by hedge funds. China continued its trend of reducing its Treasury holdings, falling to $765.4 billion—the lowest since December and part of a broader decline seen since 2018.
Market data also revealed mixed investment behaviors. U.S. equities saw net inflows of $10.4 billion in March, down from February’s $24.7 billion. Treasury bonds and notes recorded $123 billion in net inflows, with corporate bonds also attracting $60.4 billion. However, agency securities experienced outflows of $10.4 billion, reflecting shifting investor sentiment across asset classes.
Despite the record Treasury holdings, overall net foreign transactions in U.S. long- and short-term securities—including banking flows—saw a net outflow of $254.3 billion in March. This was a slight increase from the $248.9 billion outflow in February, suggesting that while Treasury investments grew, broader financial flows remained under pressure amid global economic and policy concerns.
Source: CNBC