US Treasury Reports Decline in September Holdings by Major Creditors

Key Findings

According to the Treasury International Capital (TIC) report for September, major foreign creditors of the United States reported a decline in their holdings of US Treasury securities. Overall, foreign holdings of US Treasuries fell by $344 billion or 2.6%, to $12.76 trillion in September. This represents the largest monthly decline since March 2020.

The decline was driven by a $286 billion reduction in holdings by China, the largest foreign holder of US Treasuries. Japan, the second-largest holder, also reduced its holdings by $43 billion. The decline in holdings by these two countries was partially offset by an increase in holdings by other foreign creditors, including the United Kingdom, Switzerland, and Canada.

Implications

The decline in foreign holdings of US Treasuries could have several implications. First, it could put upward pressure on interest rates as the US government will need to borrow more to finance its budget deficit. Second, it could weaken the US dollar as foreign investors sell off US Treasuries to buy other currencies. Third, it could create uncertainty in the financial markets as investors worry about the future of the US economy.

Conclusion

The decline in foreign holdings of US Treasuries is a significant development that could have implications for the US economy and financial markets. The US government and Federal Reserve will need to monitor the situation closely and take appropriate action to mitigate any potential negative consequences.

Additional Information

• Treasury International Capital (TIC) report
• Federal Reserve's Beige Book
• NPR: Foreign Investors Are Dumping U.S. Treasuries. That Could Mean Higher Interest Rates For You