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Foreign ownership of US Treasury securities drops in April

Published:Wednesday | June 17, 2015 | 6:00 AM

Foreign holdings of US Treasury securities fell in April, the first setback since October.

Total holdings slipped to US$6.14 trillion, down 0.6 per cent from the record level of US$6.18 trillion in March, the Treasury Department reported Monday.

China, the No. 1 foreign holder of US government debt, boosted its holdings a slight 0.2 per cent to US$1.26 trillion in April following a three per cent rise in the previous month. The big March advance allowed China to regain the top spot in foreign ownership of Treasury securities after having relinquished the No. 1 ranking in February.

Japan, which had briefly surpassed China, trimmed its holdings by 0.9 per cent in April to US$1.22 trillion. It remained in second place.

Demand to remain strong

Demand for US government debt is expected to remain strong this year.

February marked the first time that Japan had been in the top spot since August 2008 when China overtook Japan as the largest foreign owner of Treasury securities.

Foreign central banks have been increasing their holdings of US government debt. In April, their holdings rose a modest 0.1 per cent to US$4.13 trillion. That represents 67 per cent of total foreign holdings.

US Treasury securities are considered a super-safe investment and are viewed as a safe haven during times of turbulence in other markets.

Investors are also looking for US interest rates to begin rising at a gradual pace once the Federal Reserve begins to boost a key short-term interest rate which it has held at a record low near zero since late 2008. Private economists believe the first Fed rate hike will come later this year, probably in September.

- AP