China reduced its holdings of U.S. debt for the third consecutive month, and its holdings hit a new low since June 2010

　　The Paper reporter Chen Peizhen

　　On January 18, EST, the U.S. Department of the Treasury released the International Capital Flows Report (TIC) for November 2022.

According to the latest data, in November 2022, Japan and China (Mainland) will be the top two "creditors" of US treasury bonds.

In November 2022, Japan will end the reduction of its holdings of U.S. Treasury bonds since July 2022, increasing its holdings by US$17.8 billion to US$1.0822 trillion that month.

China reduced its holdings of U.S. Treasury bonds for the third consecutive month, reducing its holdings by US$7.8 billion to US$870 billion that month, the lowest position since June 2010.

　　In 2022, the Federal Reserve's substantial interest rate hikes are in stark contrast to Japan's loose monetary policy.

However, at the end of 2022, the Bank of Japan's sudden "hawkish" turn has left the market guessing whether its loose monetary policy will turn.

　　Judging from the holdings of U.S. debt, Japan turned to a small increase in its holdings of U.S. debt in the month before its "surprise attack" on the market, that is, in November 2022, and in October 2022, Japan's reduction in U.S. debt The range of holdings narrowed from the previous month. In September 2022, Japan once sharply reduced its holdings of U.S. debt by US$79.6 billion.

　　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, and increase their holdings when U.S. bond yields fall.

On November 10, 2022, after the U.S. Bureau of Labor Statistics released inflation data for October that fell more than expected, the U.S. 10-year Treasury yield has entered an overall downward trend. Previously, it had been rising all the way because the Fed was more "hawkish" in raising interest rates.

　　At that time, the data released by the U.S. Bureau of Labor Statistics showed that the U.S. CPI in October 2022 would increase by 7.7% year-on-year, which was lower than market expectations, and the previous value was 8.2%.

　　From the perspective of mainland China, in May last year, China's holdings of US debt decreased by US$22.6 billion from the previous month to US$980.8 billion, the first time since May 2010 that its holdings of US debt were less than US$1 trillion.

After slightly increasing its holdings in July and August 2022, China will reduce its holdings of U.S. debt in September, October, and November.

　　From a full-year perspective, at the beginning of 2022, the U.S. debt held by Japan and China will be 1.3031 trillion U.S. dollars and 1.0601 trillion U.S. dollars respectively; as of November 2022, the U.S. debt held by Japan and China will be 220.9 billion U.S. dollars and 190.1 billion U.S. dollars lower than the beginning of the year. Dollar.

　　According to the November international capital data disclosed by the U.S. Treasury Department on its official website, the net foreign purchases of long-term and short-term U.S. securities and bank transactions in November amounted to $213.1 billion.

Among them, the net foreign private inflow was US$212.7 billion, and the foreign official net inflow was US$400 million.

　　In November, foreign residents increased their holdings of long-term U.S. securities, with net purchases of $140.6 billion.

Foreign private investors bought a net $152.8 billion, while foreign official institutions sold a net $12.2 billion.

U.S. residents reduced their holdings of long-term foreign securities, with a net sell-off of $30.9 billion.

　　Taking into account both international long-term securities and U.S. long-term securities, foreign net purchases of long-term securities were $171.5 billion.

After accounting for adjustments such as estimates of principal payments to foreign investors on unrecorded U.S. asset-backed securities, net foreign purchases were estimated at $165.2 billion in November.

　　Holdings of U.S. Treasury securities by foreign residents rose by $4.7 billion.

All dollar-denominated short-term U.S. securities held by foreign residents and other custody liabilities fell by $1.0 billion.

Banks' net dollar-denominated liabilities to foreign residents rose by $49 billion.

　　The US Treasury will next release Treasury International Capital (TIC) data for December 2022, scheduled for February 15, 2023.