Foreign investors trimmed their holdings of U.S. Treasury securities by $78 billion in June, the largest monthly decline since March 2021, according to preliminary data released by the U.S. Treasury Department.
Japan, the largest foreign holder of Treasuries, reduced its position by $27 billion to $1.11 trillion. The United Kingdom decreased its holdings by $21 billion to $668 billion, while China, the second-largest holder, cut its stake by $30 billion to $770 billion. The declines contributed to a broader reduction in foreign ownership of U.S. government debt, which fell to $7.59 trillion from $7.67 trillion in May.
The outflows were partly offset by increases from other major holders. Luxembourg added $10 billion to its holdings, bringing its total to $374 billion, while Belgium increased its stake by $5 billion to $277 billion. The shifts reflect evolving portfolio adjustments by central banks and institutional investors amid shifting global monetary policy expectations and currency dynamics.
The data underscores the sensitivity of foreign demand for U.S. Treasuries to changes in interest rate differentials, currency movements and geopolitical considerations. The decline in June follows a period of elevated volatility in global bond markets, driven by expectations of divergent central bank policies and concerns over economic growth in key regions.
U.S. Treasury yields rose modestly in the days following the release of the data, as investors reassessed the outlook for Federal Reserve policy and the attractiveness of dollar-denominated assets. The 10-year Treasury yield climbed to 4.35% from 4.28% in the prior session, signaling a cautious tone among bond traders.
