Foreign holdings of US Treasury securities slip

AP News
Posted: Dec 15, 2014 4:23 PM

WASHINGTON (AP) — Foreign buyers of U.S. Treasury securities trimmed their holdings by a small amount for the second straight month in October.

The Treasury Department said Monday in its monthly report that foreign holdings dropped 0.1 percent to $6.06 trillion, a decline of $7.5 billion. That followed a drop of $200 million in September, which came after holdings had climbed to a record high of $6.07 trillion in August.

China, the top foreign buyer of U.S. Treasury debt, reduced its holdings by 1.1 percent to $1.25 trillion in October after a reduction of 0.3 percent in September. Japan, the No. 2 buyer, increased its holdings by $600 million to $1.22 trillion in October.

Demand for Treasury securities, still viewed as one of the world's safest investments, is expected to remain strong in 2015.

Foreign governments, through their central banks, account for 68 percent of the total foreign holdings of Treasury debt. In October, they trimmed those holdings by 0.4 percent.

Republicans took control of the Senate in the November elections and will control both the House and Senate starting in January. The current suspension of the government's borrowing limit expires on March 15. But Republican Sen. Mitch McConnell, who will become Senate majority leader next year, has said he does not support using the threat of a possible default on the debt as bargaining chip in future budget battles.