Foreign holders shed $72 billion of Treasury securities in June, bringing their total holdings down to $9.30 trillion, according to Treasury data released this afternoon. The entities that shed Treasuries were “foreign official” holders — central banks and government entities — while foreign private-sector holdings remained at a huge record, with the big seven financial centers leading the charge.

Combined, foreign official holders shed $70 billion in June. Since February, they have shed $233 billion, bringing their holdings down to $3.78 trillion, the lowest level since February 2024.

The data come from the Treasury International Capital (TIC) report, the government’s monthly accounting of cross-border holdings and the primary public window into who owns US debt. The figures land with a lag — June’s numbers were released weeks after the month closed — and they are watched closely because the Treasury market, the largest and most liquid government bond market in the world, is where the US government funds its budget deficits, so shifts in foreign demand are a recurring focus for anyone tracking how that debt is absorbed.

“Foreign” private-sector entities, by contrast, kept their Treasury holdings essentially unchanged at the record $5.52 trillion. These include US companies with offshore accounts, such as Apple in Ireland, and US hedge funds domiciled in the Cayman Islands that engage in the basis trade and hold the Treasuries that form the base for that trade in the Cayman Islands.

Japan: $26 billion shed in June, $123 billion since February

Japan reduced its Treasury holdings by $26 billion in June. Since February, it has reduced its holdings by $123 billion.

Japan has attempted to prop up the yen multiple times in recent years, including twice this year, most recently the “big kahuna” joint US-Japan intervention at the beginning of August. Each time, Japan sold dollars and bought yen in the foreign exchange markets.

To get these dollars, Japan’s authorities can do several things, including:

• Letting Treasury securities mature without rolling them over, or selling some outright, and setting aside the USD cash while preparing for the next yen intervention.
• Unwinding their overnight reverse repos at the Fed as needed.

The Fed has $358 billion in “foreign official” reverse repos on its balance sheet. This is essentially USD cash that foreign central banks have put on deposit at the Fed, and the Fed owes them this USD cash. Foreign central banks can unwind the reverse repos to cash out the USD when needed (foreign official reverse repos, like the other reverse repos, are a liability on the Fed’s balance sheet, not an asset).

The big drops in Japan’s holdings in 2022, 2024, and 2026 roughly line up in advance of Japan’s big yen interventions, as Japan was shedding Treasuries — likely by not rolling over maturing securities — to prepare for the interventions ahead of time, and later added back some Treasuries. The interventions require sudden selling of dollars and buying of yen in a quantity large enough to at least temporarily move the market. To obtain that large quantity of USD cash, Japan needs to prepare in advance, such as by not rolling over maturing Treasury securities in the weeks and months ahead of an intervention.

Because the June reporting period closed before the joint intervention at the start of August, the TIC reports for the following months are where any related changes in Japan’s Treasury holdings or its reverse-repo position at the Fed would become visible.

Mainland China and Hong Kong

Mainland China and Hong Kong combined shed $42 billion in June and $84 billion over the 12-month period, continuing a long, methodical process of reduction. Mainland China’s Treasury holdings peaked at roughly $1.3 trillion in 2013 and have been worked down in steps in the years since, making this one of the longest-running reductions among major foreign holders.

The big seven financial centers

Seven of the largest holders are financial centers. Combined, their Treasury holdings dipped by $11 billion in June, from the record set in May, to $3.23 trillion. They account for about 35% of all foreign holdings.

In order of magnitude of their holdings, they are: the United Kingdom — or more precisely the City of London, the largest financial center in the world; the Cayman Islands, where US hedge funds are domiciled; Belgium, home of Euroclear; Luxembourg; Ireland; Switzerland; and Singapore.

Some of them added to their holdings, while others shed holdings. But these movements do not necessarily signify foreign attitudes and concerns about US Treasuries, and there is certainly no lack of interest in Treasuries at these financial centers.

Japan, Mainland China & Hong Kong, and the seven financial centers combined account for 57% of total foreign holdings of US Treasuries.

Other major holders, and changes in June

• Canada: $460 billion, +$24 billion
• France: $390 billion, -$3 billion
• Norway: $203 billion, -$4 billion
• India: $186 billion, +$5 billion
• Brazil: $168 billion, unchanged
• Saudi Arabia: $142 billion, +$2 billion
• South Korea: $135 billion, +$3 billion
• UAE: $115 billion, -$4 billion
• Israel: $111 billion, -$7 billion

What was not a factor in June: market value

These Treasury holdings are valued at market value. In months when long-term Treasury yields rise, the market value of Treasuries falls, which causes those holdings to fall even without foreign holders changing anything. In other months, when long-term yields fall, the market value of Treasuries rises, and those foreign holdings rise even if holders do not change anything.

In June, long-term Treasury yields ended the month about where they had started it, with the 10-year Treasury yield at 4.45% at the end of May and at the end of June. The market value of long-term Treasuries therefore changed very little from the end of May to the end of June, and market value was not a factor.