Foreign holdings of US Treasuries drop $72.1 bn in June

Foreign holdings of US Treasuries fell by $72.1 billion in June from May, standing at $9.3 trillion, according to data released by the US Treasury Department on Monday. This marks a decline in three of the past four months from a record high in February, as US government bonds have posted losses amid investor concerns over large budget deficits and above-target inflation.

Japan, the largest holder, led the drop with a $26.4 billion reduction to $1.12 trillion. Livemint reports that Japan's yen has been under pressure, spurring interventions by Tokyo. In late July, US Treasury Secretary Scott Bessent announced a rare coordinated intervention, partly over concern that Japan might sell Treasuries to defend the yen, pushing US borrowing costs higher. A strategist at Pioneer Investments noted the June drop was clearly due to forex intervention and said Japan is unlikely to repeat such selling.

China's holdings fell by $25.9 billion to $633.4 billion, the second-biggest decline. The foreign holdings data reflect both valuation changes and net sales or purchases.