In June 2023, foreign demand for U.S. Treasuries reached a record level of $9.13 trillion. This figure increased by $1 trillion compared to the same month last year, although capital flows exhibit mixed trends.
Records and Demand Dynamics
According to the U.S. Treasury Department, global holdings of U.S. government debt surpassed $9 trillion for the fourth consecutive month. However, despite the high level of demand, the country experienced a $5 billion outflow in June, following a significant $147 billion inflow in May.
Who is Buying and Who is Selling
Japan increased its investment in U.S. Treasuries to $1.147 trillion, becoming the largest foreign holder of American debt. The United Kingdom also raised its investments to $858.1 billion. Meanwhile, China remains at $756.4 billion, the lowest level since February 2009. Research from the People's Bank of China indicates that 'the expansion of U.S. debt obligations is unsustainable.'
Impact on Economy and Stock Market
Additionally, India and Hong Kong have reduced their holdings in U.S. Treasuries, signaling increased caution in the region. Despite the bond sales, foreign investors poured $163.1 billion into U.S. equities in June. However, the total net capital inflow into the U.S. fell to $77.8 billion, a 75% decrease from May.
Thus, despite the record demand for U.S. Treasuries, a complex investment dynamic is observed, indicating heightened risks and caution among foreign investors.
