In September, foreign holdings of U.S. Treasuries experienced a decline, as per reports, marking the first decrease in six months. The Treasury has at last published the capital flows data following the federal government’s 43-day shutdown. The Treasury announced that data for October will be released on December 18. In September, holdings of U.S. Treasuries decreased to $9.249 trillion, a slight decline from $9.262 trillion in August. However, in comparison to the previous year, Treasuries held by foreign entities increased by 5.5%.

Japan continued to be the largest non-U.S. holder of Treasuries, possessing $1.189 trillion in September. This marks its highest holdings since August 2022, when their collection of U.S. government debt reached $1.196 trillion. Japan’s holdings have seen a consistent increase for nine consecutive months. China’s holdings of Treasuries decreased to $700.5 billion in September, down from $701 billion in August. In July, the total of Treasuries decreased to $696.9 billion, marking the lowest level since October 2008, when holdings dropped to $684.1 billion. The world’s second-largest economy ranks as the third-largest holder of U.S. Treasuries, following the United Kingdom.

Over the past decade, there has been a steady decline in U.S. Treasury holdings by China, a trend that analysts attribute to a combination of strategic and market-driven factors. Beijing has strategically aimed to reduce its reliance on the U.S. dollar for reserves, trade settlement, and investment purposes. China has been reducing its Treasury portfolio to bolster the yuan. Experts observed that a decelerating economy, ongoing post-COVID difficulties, and increasing trade barriers have restricted export inflows, intensifying the need for Beijing to stabilize its currency. In September, UK investors decreased their holdings of Treasuries to $865 billion, a decline from $904.3 billion in August. In September, foreign purchases of Treasuries decreased to $25.5 billion, a decline from $48.5 billion in August and $44.6 billion in July.

In May, foreign inflows into Treasuries reached $147.4 billion, marking the highest level since August 2022. Markets are poised in anticipation of Nvidia. In September, foreign investors acquired $132.9 billion in U.S. equities, an increase from $89.4 billion, marking a significant turnaround from the outflows of $16.2 billion recorded in July. The data indicated that the net capital inflow into the United States reached $190.1 billion, surpassing the $187.1 billion recorded in August. In July, a net capital outflow of $6.6 billion was recorded.