Foreign holdings of US Treasuries fall in June, led by Japan, UK, China

The three largest foreign holders of US government debt all pulled back in June, trimming a combined $61 billion from their Treasury positions and sending total foreign holdings down to $9.299 trillion from $9.371 trillion in May. The Treasury International Capital data, released August 17, paints a picture of cooling global appetite for American IOUs. Net Treasury inflows collapsed from $56.6 billion in May to just $6.8 billion in June, a 88% drop that’s hard to dismiss as routine portfolio rebalancing. The big three step back Japan remains the world’s largest foreign holder of US Treasuries, but its enthusiasm is waning. Tokyo held $1.116 trillion in June, down from $1.143 trillion in May, a 2.3% monthly decline. For context, Japan’s holdings peaked at $1.325 trillion in November 2021, meaning the country has shed roughly $209 billion in Treasuries over the past four and a half years. The United Kingdom, the second-largest holder, trimmed its position by about 1% to $939.9 billion from $948.6 billion. The UK’s Treasury holdings are widely viewed as a proxy for global hedge fund flows, since many offshore funds custody their assets through London. Then there’s China, where the num...