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Foreign U.S. Treasury holdings rose in August but at slower pace

Economic IndicatorsOct 19, 2021 02:11PM ET
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© Reuters. FILE PHOTO: Signage is seen at the United States Department of the Treasury headquarters in Washington, D.C., U.S., August 29, 2020. REUTERS/Andrew Kelly/File Photo

By Ross Kerber

(Reuters) - Foreign holdings of U.S. Treasuries rose for a fifth straight month in August and hit a record high, but the pace of increase slowed, data from the Treasury Department showed on Monday.

Foreign investors held $7.56 trillion of Treasuries as of the end of August. In July, foreign holdings of Treasuries stood at $7.54 trillion, the previous record according to Refinitiv Datastream, and up from $7.5 trillion at the end of June.

Gennadiy Goldberg, rates strategist for TD Securities, said the slower rate of increase likely reflected foreign buyers taking stock of less-volatile trading for U.S. debt during August.

The yield on the benchmark U.S. 10-year Treasury note started the month at 1.237% and finished August slightly higher at 1.307% after trading within a narrower range than in July.

"Given that rates stabilized (In August) you saw a more mixed buying and selling picture than before," Goldberg said of the foreign purchase pattern.

U.S. Treasury yields are low by historic standards but higher than government bond yields in many other major countries, boosting their attractiveness to foreign investors.

Monday's data showed Japan remained the largest non-U.S. net holder of Treasuries with $1.32 trillion in August, up from $1.31 trillion at the end of July. Second-placed China had $1.05 trillion of U.S. Treasuries at the end of August, down from $1.07 trillion a month earlier.

Net foreign purchases of long and short-term U.S. Securities and banking flows totaled $91 billion for August, down from $164.1 billion in July.

Of the August amount, net foreign private inflows were $125 billion, down from $166 billion in July. Net foreign official outflows were $34 billion, compared with outflows of $2.1 billion in July.

Foreign U.S. Treasury holdings rose in August but at slower pace
 

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