Foreign holdings of US Treasury securities climb

AP News
|
Posted: Oct 16, 2014 4:35 PM

WASHINGTON (AP) — Foreign buyers of U.S. Treasury securities boosted their holdings in August to a record high. China, the largest foreign owner of Treasury debt, increased its holdings after two months of reductions.

The Treasury Department says in its monthly report that foreign holdings increased 1.1 percent to an all-time high of $6.07 trillion, after having fallen by 0.3 percent in July.

China, the top foreign buyer of U.S. Treasury debt, increased its holdings by 0.4 percent to $1.27 trillion. Japan, the No. 2 buyer, boosted its holdings by 0.9 percent to $1.23 trillion.

Foreign central banks are big holders of U.S. Treasurys, which are viewed as one of the world's safest investments. In August, government holdings increased 1.1 percent to $4.16 trillion.

Foreign demand for Treasury debt is expected to remain strong this year, driven in part by geopolitical tensions that make U.S. Treasury bonds attractive as a safe haven. Strong appetite for Treasury debt has kept the interest the government must pay for that debt at very low levels. The yield on the 10-year Treasury note was little changed at 2.15 percent on Thursday following a sharp drop the day before.

Foreign demand has also been bolstered by a congressional agreement to avoid a fight over the U.S. debt ceiling until March 2015.

A standoff in August 2011 over raising the government's borrowing limit rattled financial markets. The political gridlock led the credit rating firm Standard & Poor's to downgrade its AAA rating of U.S. debt for the first time in history. But at the beginning of this year, the administration and Congress reached an agreement to postpone any further fights by suspending the debt ceiling until March 2015.