According to US Treasury Department’s released figures, Chinese holdings dropped to US$1.003 trillion in April 2022, down US$36.2 billion from US$1.039 trillion the previous month. The world’s second largest economy’s holdings of US Treasuries tumbled in April to their lowest since May 2010, with Chinese investors likely cutting losses as Treasury prices fell after US Federal Reserve officials signaled sizable rate hikes to temper soaring inflation.
To recap, the historical low of China’s stock of Treasuries recorded was in May 2010 was US$843.7 billion.
Meanwhile some analysts are of the view that the reduction in Treasury holdings may also have been aimed at diversifying China’s foreign exchange holdings.
The selling contributed to a drop in overall foreign holdings of Treasuries in April that propelled the treasury yields to go higher. US benchmark 10-year Treasury yields started April with a yield of 2.3895 percent, and surged roughly 55 basis points to 2.9375 percent by the end of the month.
It is noteworthy that Japan’s holdings of US Treasuries also fell in April to their lowest since January 2020, amid a persistent decline in the yen versus the dollar.
