Concerns over inflation triggered by the Iran war led to a sell-off in US Treasury bonds. The scale of foreign holdings of US Treasuries decreased by $138.4 billion in March compared to the previous month, with valuation losses being the main cause. Among the top three overseas holders of US Treasuries, Japan reduced its holdings by $47.7 billion in March, while the United Kingdom increased its holdings by $29.7 billion. China's holdings dropped by $41.0 billion to $652.3 billion, reaching the lowest level since 2008.
The scale of U.S. Treasury holdings by foreign investors fell from a historical high in March, with net sales of short-term Treasury bills and valuation losses being the main drag.
Data released by the U.S. Department of the Treasury on Monday showed that foreign holdings of U.S. Treasuries decreased by $138.4 billion in March compared to the previous month.
The Bloomberg U.S. Treasury Index fell 1.7% during the month, marking the largest monthly decline since 2024. Concerns over inflation triggered by the Iran war led to bond sell-offs. Overseas investors recorded $142.1 billion in valuation losses on long-term Treasury bonds, which was the core reason for the overall decline this round.
In terms of net transactions, foreign investors sold $16.6 billion worth of short-term Treasury bills (with maturities of one year or less) while increasing their holdings of long-term Treasury bonds by $13.5 billion during the same period.
As the largest foreign holder of U.S. Treasuries, Japan reduced its holdings by $47.7 billion in March, bringing them down to $1.19 trillion. The United Kingdom, which ranks second in holding size, increased its holdings against the trend by $29.7 billion, reaching $926.9 billion.
China, the third-largest holder, reduced its holdings by approximately $41 billion in March, bringing them down to $652.3 billion—the lowest level since 2008.
Official holding data also came under pressure. Foreign official accounts (mainly comprising central banks of various countries) collectively decreased by $108.7 billion in March, dropping to $3.9 trillion, accounting for the majority of the overall decline. Changes in private investor holdings were relatively limited.
Editor/Stephen