(Reuters) – Foreign holdings of U.S. Treasuries rose to a record high in July, while Japan’s U.S. government bond assets fell to the lowest since October, data from the Treasury Department showed on Wednesday.
Holdings of U.S. Treasuries rose to $8.339 trillion in July from $8.211 trillion in June.
Japan’s Treasuries holdings decreased to $1.116 trillion from $1.118 trillion the previous month. Japan remains the largest foreign holder of U.S. Treasury securities. China, which is No. 2, cut its holdings to $776.5 billion from $780.2 billion in June.
Market participants have been focused on Japan’s Treasury holdings due to the country’s recent interventions to boost the Japanese yen. Japanese authorities appeared to intervene to sell dollars and buy yen in late April and May and again in July, which was likely financed in part by sales of Japan’s U.S. government debt portfolio.
Official data at the end of July showed that Japanese authorities spent 5.53 trillion yen intervening in the foreign exchange market that month to pull the yen off 38-year lows.
Treasury yields fell in July as traders adjusted to the likelihood that the Federal Reserve was getting closer to cutting interest rates. The U.S. central bank on Wednesday cut rates by half a percentage point, its first cut since 2020, and flagged further reductions.
