China increases holdings of US Treasuries despite diversification trend
Overall foreign holdings climb to US$9.371 trillion in May, with China’s rising to US$659.3 billion after hitting an 18-year low in April
China modestly increased its holdings of US Treasuries in May after they hit an 18-year low in April, though the move did little to alter a broader diversification trend that has seen Beijing steadily reduce its exposure to American government debt.
China’s US Treasury holdings rose to US$659.3 billion in May from US$651.1 billion in April. The amount reported in April was the lowest since September 2008, based on figures compiled by financial data provider Wind.
Meanwhile, overall foreign holdings of US Treasuries climbed to US$9.371 trillion in May from US$9.353 trillion in April.
Japan, the largest foreign holder of US Treasuries, cut its holdings to US$1.14 trillion in May from US$1.21 trillion in April, while the United Kingdom’s holdings rose to US$948.6 billion from US$937.5 billion.
In May, the US-Israel war on Iran remained a key source of geopolitical uncertainty despite a tentative ceasefire, with investors closely watching the risk of renewed hostilities and their implications for global growth and inflation.
The US Federal Reserve’s new chairman, Kevin Warsh, took office that month, with investors scrutinising his early policy remarks for clues on the future path of US interest rates amid lingering concerns over the central bank’s independence.