Central banks and government entities sold $70 billion in Treasuries in June. Japan cut by $26 billion, likely pre-positioning for yen intervention. China and Hong Kong shed $42 billion.
Alpha Score of 56 reflects moderate overall profile with weak momentum, weak value, strong quality, moderate sentiment.
Foreign holders of U.S. Treasury securities sold a net $72 billion in June, bringing total foreign holdings to $9.30 trillion, according to Treasury data released today.
The selling was concentrated among foreign official institutions – central banks and government entities. Combined, they shed $70 billion in June, extending a drawdown that has now reached $233 billion since February. Their holdings fell to $3.78 trillion, the lowest since February 2024.
Foreign private-sector entities, by contrast, kept their Treasury holdings essentially flat at a record $5.52 trillion. This category includes U.S. companies with offshore accounts – Apple in Ireland, for example – and U.S. hedge funds domiciled in the Cayman Islands that use Treasuries as collateral in the basis trade.
Japan led the official-sector selling. It cut its Treasury holdings by $26 billion in June, bringing the total reduction since February to $123 billion.
The timing lines up with Japan's yen intervention operations. Tokyo has intervened multiple times in recent years to prop up the yen, including twice this year. The most recent move was a joint U.S.-Japan intervention in early August. Each time, Japan sells dollars and buys yen. To get the dollars, the authorities can draw on the $358 billion in foreign official reverse repos parked at the Fed – essentially USD cash on deposit that can be tapped daily.
But the big drops in Japan's Treasury holdings in 2022, 2024, and 2026 each preceded major yen interventions. The pattern suggests Japan prepared by not rolling over maturing securities in the weeks and months ahead, then added Treasuries back later.
Mainland China and Hong Kong combined shed $42 billion in June and $84 billion over the past 12 months, continuing a long, methodical reduction.
Seven financial centers – the United Kingdom (City of London), the Cayman Islands, Belgium, Luxembourg, Ireland, Switzerland, and Singapore – hold about 35% of all foreign Treasury holdings, or $3.23 trillion. Their combined holdings dipped $11 billion in June from a record in May. Some added, some sold. The moves reflect hedge fund positioning and custody flows, not necessarily foreign sentiment about U.S. debt.
Japan, China and Hong Kong, and the seven financial centers together account for 57% of total foreign Treasury holdings.
Other major holders and their June changes: [data not provided in source]
The market value of Treasury securities was not a factor in June. The 10-year yield ended the month at 4.45%, essentially where it started. So the value change from May to June was negligible.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.