China recently offloaded a massive chunk of its US Treasury holdings, sparking concerns about the US economy.
A Big Sell-Off
New government figures reveal that China slashed its US Treasury holdings by a whopping $18.9 billion between February and March. This is in stark contrast to other countries, who actually increased their holdings during the same period.
Shifting Global Landscape
The UK has now overtaken China to become the second-largest foreign holder of US Treasuries. Japan remains the top holder, although its holdings have slightly decreased.
A Warning Sign?
Macro investor Luke Gromen points out a potential problem: countries buying more US Treasuries might not be able to simultaneously increase purchases of American goods. This could worsen the US trade deficit, a key issue for the US government. Gromen highlights the significant increase in Treasury holdings by the UK, Cayman Islands, and Canada, questioning how these countries can both buy Treasuries and increase imports from the US. He notes that the Cayman Islands, with a population of only around 73,000, is now the fourth-largest foreign holder of US debt.
Long-Term Trend?
Analysts have noted that China’s holdings of US Treasuries have been declining since 2018. Despite this, overall foreign holdings of US Treasuries hit a record high of $9.05 trillion in March.
Disclaimer:
This information is for general knowledge and shouldn’t be considered investment advice. Always do your own research before making any investment decisions./p>
