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Cailianshe News, August 16 (Editor: Xiaoxiang)On Friday (August 16th) local time, the U.S. Treasury Department released the June 2024 International Capital Flows Report (TIC). The report shows that the scale of U.S. Treasury bonds held by foreign investors in June further hit a record high. Among them, the movements of Japan and China, the top two overseas "creditors" of the United States, are almost opposite: Japan reduced its holdings of U.S. Treasuries by more than 10 billion U.S. dollars due to the need for foreign exchange intervention, while China rarely increased its holdings of U.S. Treasuries by almost the same amount.

The report showed that China's holdings of U.S. Treasuries increased by $11.9 billion to $780.2 billion in June. This is China's second increase in holdings since April this year, and it is also the largest increase in U.S. Treasuries this year.

After this increase, China's holdings of U.S. Treasuries have risen to the highest level since January this year. However, the cumulative reduction in holdings this year is still about US$36 billion.

Since April 2022, China's U.S. debt holdings have been below $1 trillion. After reducing holdings in March, China's U.S. debt holdings once fell below the low of $769.6 billion in October last year, setting a new low since March 2009.

It is worth mentioning that China's increase in holdings of U.S. Treasuries in June just happened to precede the sharp rise in the U.S. Treasury market this summer.

In June, the prices of U.S. Treasury bonds of all maturities generally closed higher. Since then, as market expectations of interest rate cuts have rapidly increased and global stock market turmoil has triggered risk aversion, U.S. Treasury prices have further risen in July and August, with the 10-year U.S. Treasury yield falling below the 4% mark.

At the same time, it is not difficult for market participants to find that this round of increase in China's holdings of U.S. Treasuries also occurred when the People's Bank of China suspended the increase of its gold reserves.On August 7, the latest data released on the official website of the People's Bank of China showed that as of the end of July 2024, my country's central bank gold reserves were 72.8 million ounces (about 2,264.33 tons), the same as last month. This is the third consecutive month that the People's Bank of China has stopped increasing its gold reserves.

Japan continues to reduce its holdings of U.S. debt

In addition to China, the biggest highlight of this latest TIC report is undoubtedly focused on Japan, the largest overseas "creditor" of the United States. The report shows that Japan's holdings of U.S. Treasury bonds in June decreased by US$10.6 billion from May to US$1.1177 trillion. This is also the third consecutive month that Japan has significantly reduced its holdings of U.S. Treasury bonds - a total of US$70.1 billion in three months.

Japan has been the largest overseas holder of U.S. Treasuries since it surpassed China in June 2019. Japan's recent move to reduce its holdings of U.S. Treasuries is clearly related to its intervention in the foreign exchange market for the yen. Market participants have been paying attention to Japan's holdings of U.S. Treasuries as dollar reserves as the Japanese monetary authorities threatened to intervene to support the yen.

Industry insiders said that Japanese authorities appear to have intervened in the foreign exchange market several times in late April, May and July to boost their currency by selling dollars and buying yen, and some of the funds may have come from the U.S. government bonds sold by Japanese authorities.Bondscombination.

Overall, the size of U.S. Treasury bonds held by foreign investors increased further to US$8.210 trillion in June, from US$8.132 trillion in May, setting a new record high.

Among the top ten overseas "creditors" of the United States, China, Britain, Canada, Belgium and France increased their holdings that month, while Japan, Luxembourg, the Cayman Islands, Ireland and Switzerland reduced their holdings that month.