China sold the most US Treasury bonds in nearly two and a half years in March amid uncertainty over a trade deal between Beijing and Washington, according to US Treasury data released Wednesday.
Since last week, after a bleak 1
The latest data on China's US bond holdings was compiled just before a sudden collapse in trade talks between the world's two largest economies 1 1/2 weeks ago and before the US Customs Toll for Chinese government bonds oods, which came into effect on Friday ,
China sold $ 20.45 billion in government bonds in March, most since October 2016, after $ 1.08 billion a month ago.
China's share of government bonds fell to $ 1.121 trillion in March for the first time in four months. This was the lowest level since May 2017, when it was $ 1.102 trillion. In February, it was $ 1,131 trillion, as the data showed.
"The decline this month brings China to virtually the February level and offsets increases from December to February," wrote Jefferies LLC's leading money market economist Tom Simons in a research note.
Despite the decline in Treasuries holdings, the world's second largest economy remained the largest US creditor.
On the other hand, Japan raised its treasury holdings from $ 1.072 trillion to $ 1.078 trillion, its highest level since November 2017 in February.
However, another series of treasury data showed that Japan sold $ 11.07 billion of US sovereign debt in March, most of it since February 2018 for the second largest US creditor.
Meanwhile, foreigners resumed their sell-offs in March as yields on 10-year US Treasuries fell to a 15-month low after the US Federal Reserve signaled that it would not raise interest rates in 2019.
They sold US $ 12.5 billion of US Treasury debt in March after buying $ 19.91 billion a month ago.
"Private investors have bought government bonds since the beginning of the second half of 2018, but foreign official institutions were inconsistent," Simons said.
Official overseas government bond sales coincided with a dollar rally in March triggered by safe-haven US dollar bids amid concerns about the global economy, trade tensions and uncertainty surrounding Brexit ,
Central banks of export-oriented countries often sell their Treasury holdings to protect their currencies against a strong appreciation of the US dollar.
Foreign accounts sold shares for eleven consecutive months and reduced their holdings by $ 23.64 billion in March.
On the other hand, they bought $ 4.74 billion in Agency Securities and corporate bonds worth $ 1.11 billion in March at a slower pace than the revised $ 21.5 billion in February.
Foreign central banks and other government agencies accelerated their reduction of US assets and sold $ 21.7 billion in March, compared to a revised $ 10.1 billion in the previous month.
CLICK HERE TO GET THE FOX BUSINESS APP
Official overseas sales in March were offset by net purchases by private foreign investors, US assets of $ 13.6 billion after revised sales of $ 11.4 billion acquired in February.