Japan tops China as US’s top foreign creditor

17-Aug-2019 Intellasia | JapanNews | 6:02 AM Print This Post

Japan overtook China as the largest non-US holder of Treasurys in June, after raising its holdings to a nearly three-year high, according to US Treasury department data released on Thursday.

Japan’s holdings of US Treasurys rose to $1.122 trillion in June, from $1.101 trillion in May, and were its largest since October 2016.

It was not the first time that Japan supplanted China as the largest non-US Treasury holder. From January to May 2017, Japan held more Treasurys than China, data showed.

“The generally low- and negative-yielding sovereign debt market make Treasuries comparatively more attrac-tive than European and Japanese debt,” said Benjamin Jeffery, rates strategist at BMO Capital Markets in New York.

The steepening of the yield curve when rates on long-term bonds are higher than short-term notes in June made currency hedging costs “a bit less onerous for foreign buyers,” he added.

China was the second-largest owner of US Treasurys with $1.112 trillion in June, compared with $1.110 trillion the previous month.

Overall, major foreign holders of Treasurys had $6.636 trillion of US government debt in June, up from $6.539 trillion in May, suggesting continued demand for the safe-haven asset.

Foreign flows of US Treasurys showed an outflow of $7.71 billion in June, from net selling of $32.785 billion in May. Foreign official institutions sold $14.605 billion during the month, compared with outflows from the same group totalling $21.998 billion in May.

Offshore private investors purchased Treasurys amounting to $7.071 billion in June.

Data also showed that after 13 straight months of selling, foreigners finally bought US stocks in June to the tune of $26.589 billion, after outflows of $1.445 billion in May.

Foreigners also bought $99.1 billion in net long-term securities in April, after buying $4.6 billion in May, the report showed.



Category: Japan

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