Image: Reuters Berita 24 English - China's Treasury holdings plummeted to their lowest level since May 2010, according to statistics rel...
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| Image: Reuters |
Berita 24 English - China's Treasury holdings plummeted to their lowest level since May 2010, according to statistics released on Wednesday, with Chinese investors presumably minimising losses as Treasury prices fell after Federal Reserve officials projected large rate hikes to cool surging inflation.
According to US Treasury Department estimates, Chinese assets fell to $1.003 trillion in April, down $36.2 billion from $1.039 trillion the previous month. According to data, China's Treasury stock was $843.7 billion in May 2010.
Analysts believe the fall in Treasury holdings was also intended to diversify China's foreign exchange holdings.
The Chinese sales helped push rates higher by contributing to a decline in overall foreign holdings of Treasuries in April. Benchmark 10-year Treasury yields in the United States started the month at 2.3895 percent and rose 55 basis points to 2.9375 percent by the conclusion of the month.
In April, Japan's holdings of US Treasuries fell to its lowest level since January 2020, owing to the yen's continued depreciation against the dollar, which may have pushed Japanese investors to sell US assets to profit from the exchange rate.
From $1.232 trillion in March, Japanese holdings dipped to $1.218 trillion in April. Japan remains the largest non-US Treasury holding.
Overall, foreign holdings of Treasuries fell to $7.455 trillion in March, the lowest level since April 2021.
In April, net foreign outflows of $1.152 billion were recorded, compared to net new foreign inflows of $48.795 billion in March. Since October 2021, this was the first outflow.
The Federal Reserve boosted benchmark interest rates by a quarter of a percentage point during its policy meeting in March.
It raised rates by 50 basis points in May, but by a whopping 75 basis points at its June policy meeting on Wednesday to combat a disruptive spike in inflation. In the months ahead, the Fed predicts a slower economy and rising unemployment.
In other asset classes, foreigners sold $7.1 billion in U.S. equities in April, following net withdrawals of $94.338 billion in March, the biggest since the Treasury Department began tracking this data in January 1978. For the fourth month in a row, foreign investors have sold stocks.
Inflows into US corporate bonds, on the other hand, increased to $22.587 billion in April from $33.38 billion in March, the most since March 2021. For four months in a row, foreigners have been net buyers of US corporate bonds.
Residents of the United States, on the other hand, sold $36.7 billion worth of long-term foreign securities, according to data.
