For years, contrarian investors have been expecting China and Japan to dump their holdings of United States Treasury debt, which would cause widespread panic and financial collapse at home. According to the latest numbers from the U.S. Treasury Department, these two Asian powerhouses have begun doing so.
The Treasury Department confirmed Wednesday that foreign holdings rose 0.7 percent to a record level in December. It now stands at a record $6.15 trillion. This follows a 0.9 percent hike in November – foreign holdings of U.S. debt tumbled in September and October.
China and Japan continue to trade places, but in the latest report China is the No. 1 holder of Treasury debt. It did cut its holdings by 0.5 percent but it still holds $1.24 trillion. Japan is in the second spot as it reduced its holdings by 0.9 percent to $1.23 trillion.
Belgium is No. 3 as it trimmed its holdings to $335.4 billion. When omitting the Caribbean banking centers and oil exporters, Brazil would be next on the list with $255.8 billion, down from November’s $264.2 billion.
Canada boosted its holdings by $5 billion to a total of $69 billion. Great Britain’s holdings jumped 8.4 percent to $189.2 billion.
Currently, foreign governments account for two-thirds of foreign holdings.
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