business

Japan surpasses China as largest non-U.S. holder of Treasuries

33 Comments
By Gertrude Chavez-Dreyfuss

Japan overtook China as the largest non-U.S. holder of Treasuries in June, after raising its holdings to a nearly three-year high, according to U.S. Treasury department data released on Thursday.

Japan's holdings of U.S. Treasuries rose to $1.122 trillion in June, from $1.101 trillion in May, and were its largest since October 2016.

It was not the first time that Japan supplanted China as the largest non-U.S. Treasury holder. From January to May 2017, Japan held more Treasuries than China, data showed.

"The generally low- and negative-yielding sovereign debt market make Treasuries comparatively more attractive than European and Japanese debt," said Benjamin Jeffery, rates strategist at BMO Capital Markets in New York.

The steepening of the yield curve -- when rates on long-term bonds are higher than short-term notes -- in June made currency hedging costs "a bit less onerous for foreign buyers," he added.

China was the second largest owner of U.S. Treasuries with$1.112 trillion in June, compared with $1.110 trillion the previous month.

Overall, major foreign holders of Treasuries had $6.636 trillion of U.S. government debt in June, up from $6.539 trillion in May, suggesting continued demand for the safe-haven asset.

Foreign flows of U.S. Treasuries showed an outflow of $7.71 billion in June, from net selling of $32.785 billion in May. Foreign official institutions sold $14.605 billion during the month, compared with outflows from the same group totaling$21.998 billion in May.

Offshore private investors purchased Treasuries amounting to$7.071 billion in June.

Data also showed that after 13 straight months of selling, foreigners finally bought U.S. stocks in June to the tune of$26.589 billion, after outflows of $1.445 billion in May.

Foreigners also bought $99.1 billion in net long-term securities in April, after buying $4.6 billion in May, the report showed.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

33 Comments
Login to comment

Ahh to dream, have Japan sell those securities off and pay down it's own debt!

7 ( +11 / -4 )

A behind-the-scenes step into currency manipulation to counter China's recent actions.

9 ( +9 / -0 )

This is the worst news I've heard in ages. When the US collapses in the near future, those will be worth nothing!

1 ( +8 / -7 )

Well, countries buy US debt so they can export to the US.

This is how it was designed.

Fine with America First policies but when you make your market unattractive, other countries will not buy your debt (maybe except Japan, they have to).

After cutting taxes, giving subsidies, how will the US pay for anything?

6 ( +7 / -1 )

Meanwhile, 20% of Japanese kids live in poverty, parents are unable to place their children in childcare and the elderly suffer without professional care facilities. Such a rich country!

5 ( +13 / -8 )

Worry about your own.

"It shows there are just over three million people (13.2%) living below the relative poverty line, including 739,000 children (17.3% of children)."

https://www.theguardian.com/australia-news/2018/oct/16/more-than-three-million-australians-living-in-poverty-acoss-report-reveals

1 ( +4 / -3 )

....and of course if the United States managed to get all it's NATO "Members" to pay their bills, the country would be in better shape (US).

-1 ( +5 / -6 )

Ah U.S.A. Inc! Not so much a country as a racket! No wonder it chooses petty criminals like Bush and Trump. They are representative!

5 ( +13 / -8 )

Debt is fake, the money in the USA is in private hands. The USA could make changes to it's tax system and eliminate the debt.

3 ( +7 / -4 )

US bonds and US state municipal bonds should bev a part of your investment portfolio. A lot of money is running at them as the trade war(s) at uncertainty to markets.

Just silly to predict the US economy will fail and if it did, that this would be good for any human on the planet.

0 ( +3 / -3 )

So, we're going to pretend holding onto worthless debt is something to call home about?

-1 ( +3 / -4 )

The US is the best country to invest in or simply park your money in.

Anyway, what are the Japanese and Chinese supposed to do with all those US dollars they accumulate in their foreign trade activities? Gotta stash your cash somewhere.

-1 ( +6 / -7 )

I have US intermediate term government bonds. They are doing well recently.

3 ( +5 / -2 )

I have US intermediate term government bonds. They are doing well recently.

Wrong, Orange Man Bad.

0 ( +4 / -4 )

Ah U.S.A. Inc! Not so much a country as a racket! No wonder it chooses petty criminals like Bush and Trump. They are representative!

You forgot quite a number of others, but you are jaded regarding democrats! King Bill and Queen Hillary weren't much better!

0 ( +2 / -2 )

Excellent news. Communist China has an economy thats going down, while Japan is ticking along well, government and corporations investing more in very safe havens such as USA. So much for all the "experts " who keep claiming the Japanese economy is doing badly!

The US is the best country to invest in or simply park your money in.

Well argued Jeff Lee! The USA is booming under Trump, and will continue into his second term.

-6 ( +3 / -9 )

With rates where they are they should sell them and take a capital gain.  But imagine what that would do to dollar/yen..........

Whole system is failing slowly.

0 ( +1 / -1 )

NATO "Members" to pay their bills, the country would be in better shape (US).

nothing to do with NATO, its AMerica problem in that they spend far beyond their means. American dont save they put everything on credit, not to mention the $500billion+ they spend on their military everyyear you understand why their debt ceiling is continually raised and the deficit continues to grow.

1 ( +2 / -1 )

So much for all the "experts " who keep claiming the Japanese economy is doing badly!

so with the world economy on the brink of a recession, with Trump's trade war the main instigator, well expect your expert opinion after the tax hike in October

3 ( +3 / -0 )

WA4TKG

....and of course if the United States managed to get all it's NATO "Members" to pay their bills, the country would be in better shape (US).

That's a red herring from someone with little knowledge of NATO.

America has the biggest defense budget in the world, $800 billion pa. Greater than the total budget of some countries. The U.S. military employs 2% of workers. What is spent is decided by America.

Most of the military budget is spent on mainland America. There are more than 800 overseas bases in 160 countries, cost America about $150 billion.

NATO members have their level of defense spending and an agreement to spend 2% of their GDP by 2025. Some of the members have already achieved the target, some have not.

There is also a NATO budget which is about $2 million pa and America pays about 20% of it.

1 ( +1 / -0 )

USA is by far the largest economy in the world at around 21 Trillion. The US economy is so big that the state of California is the 4th/5th biggest economy in the world and Texas is the 10th/11th. Think about it... USA dominance is not going anywhere, it's truly a country of business and humans flock from all over the world for a piece of the American Pie. Politics is good theatre but in the USA it's always about the money.

2 ( +3 / -1 )

Controlling so much debt is how the US will continue to keep its relevance. Because so many countries own so much US debt, it helps keep their currency and economies pegged to the US dollar and US economy.

This is also how America helps to ensure that it doesn’t fail. Because America failing would drag down many other economies around the world.

2 ( +2 / -0 )

Tomorrow we are abolishing money!

-1 ( +0 / -1 )

Japan has nowhere else to put all those USD.

1 ( +2 / -1 )

So, Americans spend dollars for goods and still get money back, Wow!

0 ( +0 / -0 )

Think about it... USA dominance is not going anywhere, it's truly a country of business and humans flock from all over the world for a piece of the American Pie. Politics is good theatre but in the USA it's always about the money..

Well said "JustMyThoughts". Most of the negative commenters do not understand the comment above.

1 ( +1 / -0 )

Think about it... USA dominance is not going anywhere, it's truly a country of business and humans flock from all over the world for a piece of the American Pie. Politics is good theatre but in the USA it's always about the money..

That's what every empire thought before the collapse. There is literally a saying in the English language that has developed as a result: the pride before the fall.

-2 ( +0 / -2 )

JustMyThoughts

Politics is good theatre but in the USA it's always about the money.

Which president was it that said, "the business of America is business". Coolidge?

Not stated in the article is that this has come about because China sold the most U.S. Treasuries in almost 2-1/2 years in March amid uncertainty about a trade deal.

0 ( +1 / -1 )

When the US collapses in the near future

Dream on, gokai.

1 ( +3 / -2 )

The US should be paying back its debt when the going's good

But the US keeps borrowing no matter when it's recession or not

When it's bad, it makes sense to borrow to jumpstart the economy. But what's the excuse when it's good?

1 ( +1 / -0 )

Its ok to own American bonds, but not 1 trillion worth of bonds!

Diversify, buy other foreign bonds as well. Having all your eggs in one basket will be a disaster for Japan.

The U.S. can also say look at the imbalance, look how much Japan owns, we America want you to agree to sacrifice your economy like you did in the 80s. Remember how your economy was called lost decades because of us? Sign up for it again look at how many bonds you own.

1 ( +1 / -0 )

US Treasury Bond 30 years 2% yield, not bad at all from Japan’s perspective.

1 ( +1 / -0 )

Why would you want only 2%? Must be really risk averse. Yes, Japan lean times.

The last time was Sub-Prime Mortgages. This time might be in the Treasury market. Devaluations to create inflation everywhere. Time for gold.

Folks, I am thinking that most people are caught with who’s number one, and Americans keep turning their heads to see how close China is getting. It’s like the front runner in the Hakone Ekiden who kept looking back. He was destined to be overtaken and he was! But have you ever thought about how hard it is to be the front runner or the world leader? Haven’t you ever not wanted to be assigned committe head?

I don’t see China wanting to overtake the US. It’s like the Japanese sake maker Ozeki, why do you think they didn’t name themselves Yokozuna? China is like the minister, the US the emperor. The US the CEO, China Head of Global Manufacturing, and Japan Head of R&D.

You ever seen Asians declining to be in the spot light, “no, no, no, you first?” They just keep quiet and do everything in the background yet they’re not doing anything.

China does nothing. No trade deal. No buy soy bean. Me thinks the Trade War is lost; it’s just a matter of how Trump will admit defeat. Recession might be up next year and if so no second term.

Hong Kongnese fighting Hong Kong Police. China does nothing. PLA right outside Hong Kong but it’s almost as if to protect the mainland from the protests spilling over. China will probably do nothing until the West says, “Hey Xi, how come you’re not doing anything?” Xi just waits and does nothing. Wait until Hong Kong almost self destructs then move. No way in my opinion are they going to fall for another Tiananmen trap. Do nothing and just wait.

China and Japan act like parents. Korea, Hong Kong, and Trump act like teenagers.

I like the US though. Signs as big as a tarp or “sheeto” in front of restaurants in San Jose that say “Hot Sake 99 cents!” as if everyone is nearsighted.

0 ( +0 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites