In September, the two major creditors of China and Japan dumped U.S. debt, and China’s U.S. debt position fell to the lowest level since 2010

　　The Paper reporter Chen Peizhen

　　On November 16, EST, the U.S. Department of the Treasury released the September Treasury International Capital (TIC) report.

Currently, Japan and China (Mainland) are the largest and second largest creditors of the United States respectively.

In September, the scale of U.S. Treasury bonds held by Japan was 1.1202 trillion U.S. dollars, a decrease of 79.6 billion U.S. dollars from August, which was the third consecutive month of reduction, and its holdings hit a new low in more than three years.

In September, China (Mainland)’s holdings of US debt decreased by US$38.2 billion to US$933.6 billion from the previous month, and its holdings fell to the lowest level since 2010.

　　In March of this year, under the divergence of the U.S. interest rate hike and Japan’s loose monetary policy, Japan’s holdings of U.S. treasury bonds plummeted to $1.2324 trillion in March, and Japan continued to reduce its holdings of U.S. debt to $1.2185 trillion in April.

After Japan increased its holdings of US treasury bonds by US$5.2 billion and US$12.6 billion in May and June, Japan restarted its reduction in July. Japan’s holdings of US treasury bonds in July decreased by US$2 billion month-on-month, and its holdings fell to US$1.2343 trillion; In August, Japan’s holdings of U.S. Treasury bonds decreased by US$34.5 billion from the previous month, and its holdings fell to US$1.1998 trillion.

　　It is worth mentioning that Japan intervened in the foreign exchange market in September to support the yen, and its holdings of U.S. debt also declined that month.

On November 8, the foreign exchange market intervention data released by the Ministry of Finance of Japan from July to September this year showed that the Japanese government and the Bank of Japan spent as much as 2.8382 trillion yen on September 22, which is the largest amount announced so far. The largest amount of market intervention in a single day.

　　In the early hours of September 22, the Federal Reserve announced that it would increase the target range of the federal funds rate by 75 basis points from 2.25%-2.50% to 3.00%-3.25%. This is the third consecutive rate hike by 75 basis points this year.

The previous four interest rate hikes were in March, May, June, and July, respectively, raising interest rates by 25, 50, 75, and 75 basis points respectively. 75 basis points is also the largest single rate hike since November 1994.

Judging from the performance of the U.S. Treasury bond market in September, U.S. bond yields rose after the Federal Reserve released a large "interest rate hike signal", and the yields of major-term Treasury bonds hit new highs in recent years.

Generally speaking, when U.S. bond yields are on the rise, investors tend to reduce their holdings of U.S. bond assets to reduce asset losses.

　　According to the September international capital data disclosed by the U.S. Department of the Treasury on its official website, the total foreign net income from long-term and short-term securities and bank transactions in the United States in September was 30.9 billion U.S. dollars, of which the net inflow of overseas private capital was 48.5 billion U.S. dollars. Overseas official Net outflows were $17.7 billion.

Foreign investors' holdings of long-term U.S. securities increased by $93.8 billion in September.

Among them, the long-term U.S. securities held by private foreign investors increased by $116.6 billion, while the long-term U.S. securities held by foreign official institutions decreased by $22.8 billion.

U.S. investors reduced their holdings of long-term foreign securities, selling a net $24.2 billion.

　　Taking into account both international long-term securities and U.S. long-term securities, net purchases of foreign long-term securities were $118 billion.

On an adjusted basis, overall net purchases of long-term U.S. securities by foreign investors were estimated at $104.8 billion in September.

U.S. banks' own dollar-denominated net liabilities to foreign residents fell by $65 billion.

　　Treasury International Capital (TIC) data for October is scheduled to be released on December 15, 2022, the Treasury Department said.