China Holdings Of U.S. Debt Fall Below $1 Trillion For The First Time Since 2010

• China’s holdings of U.S. debt have fallen below $1Trn for the first time in 12 years amid rising interest rates that have made treasuries potentially less attractive. Japan is now the leading holder of U.S. debt with $1.2 trillion.
• Continuing a trend that began early in 2021, China’s portfolio of U.S. government debt in May dropped to $980.8Bn, according to Treasury Department data released July 18, 2022. That’s a decline of nearly $23Bn from April and down nearly $100Bn, or 9%, from the year earlier.
• The debt decline comes as the U.S. Federal Reserve has been raising rates to stop inflation from running at its fastest rate since 1981. When rates rise on bonds, prices drop, meaning a capital loss for investors who sell the bonds ahead of maturity. The decline in China’s share also has been attributed to Beijing working to diversify its foreign debt portfolio.

(Source: CNBC)