{"id":14540,"date":"2025-05-17T06:54:24","date_gmt":"2025-05-17T06:54:24","guid":{"rendered":"https:\/\/infundpros.com\/?p=14540"},"modified":"2025-05-17T06:54:24","modified_gmt":"2025-05-17T06:54:24","slug":"uk-overtakes-china-as-second-largest-us-treasury-holder","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=14540","title":{"rendered":"UK overtakes China as second-largest US Treasury holder"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=894c1ce3-23cc-4648-a468-542fff034ff2\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>China\u2019s recorded holdings of Treasuries have fallen below those of the UK for the first time since the start of the century, underlining an ongoing shift in Beijing\u2019s management of its foreign reserves.<\/p>\n<p>The value of China\u2019s Treasury holdings as recorded by US banks and custodians fell to $765bn at the end of March, down from $784bn in the previous month, while those of the UK rose by almost $30bn to $779bn, according to data published late on Friday.<\/p>\n<p>The crossover makes the UK the second-largest foreign holder of US Treasuries after Japan. It is the first time the UK\u2019s holdings have been higher than the Chinese since October 2000 and is the latest sign that China is seeking to gradually diversify away from US assets.<\/p>\n<p>\u201cChina has been selling slowly but steadily; this is a warning to the US\u201d said Alicia Garc\u00eda-Herrero, chief economist for Asia-Pacific at Natixis. \u201cThe warning has been there for years, it\u2019s not sudden \u2014 the US should have acted on this well before\u201d.<\/p>\n<p>The data will come as a cautionary sign for the US administration following news that Moody\u2019s has followed Fitch and S&amp;P in stripping the world\u2019s largest economy of its triple-A credit rating, citing its growing debt and deficit.<\/p>\n<p>Beijing has been gradually reducing its holdings of US treasuries from a peak of more than $1.3tn in 2011, diversifying into other assets including US agency bonds and gold. Some of the fall in the value of China\u2019s holdings could also reflect market moves.<\/p>\n<p>Analysts believe China also holds a growing proportion of its US assets through third party custodians, including Euroclear in Belgium and Clearstream in Luxembourg, which obscures the true level of its holdings. Luxembourg\u2019s Treasury holdings by value were flat in March while Belgium\u2019s increased by $7.4bn from February.<\/p>\n<p>China\u2019s enormous Treasury pile is the result of a multi-decade trade surplus with the US that President Donald Trump is now seeking to reduce. But officials in the US administration have also expressed concern over foreign selling of Treasuries, which pushes yields up and makes debt refinancing more expensive.<\/p>\n<p>The proportion of China\u2019s Treasury holdings that were in short term bills, the most liquid securities that could be most easily sold off in a crunch, in March hit its highest level since 2009.<\/p>\n<p>\u201cBased on the visible data, there is no doubt that China has shortened the maturity of its US portfolio\u201d, said Brad Setser, a senior fellow at the Council on Foreign Relations and former US Treasury official.\u00a0<\/p>\n<p>The rise of the UK\u2019s recorded holdings does not reflect its own reserves. Rather, analysts say it reflects London\u2019s role as a domicile for international capital.<\/p>\n<p>Holders in Europe include insurers, banks and custodians. Some hedge funds hold Treasury securities and arbitrage by selling futures or swaps \u2014 positions known colloquially as \u201cbasis trades\u201d.<\/p>\n<p>Setser said the UK number \u201clikely [reflects] an increase in Treasuries held by global banks, the availability of custodial services in London and potentially some of the activity of hedge funds\u201d.<\/p>\n<p>Analysts said that the data, which only shows moves until the end of March, did not reflect any action taken by China after Trump\u2019s so-called \u201cliberation day\u201d escalation of his trade war.<\/p>\n<p>\u201cIt is possible that China could have made significant changes in its reserve management in the last six weeks that will only become clear with more time,\u201d said Setser.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/894c1ce3-23cc-4648-a468-542fff034ff2\" target=\"_blank\" rel=\"noopener\" rel=\"nofollow\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. China\u2019s recorded&#8230;<\/p>\n","protected":false},"author":1,"featured_media":14541,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-14540","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>UK overtakes China as second-largest US Treasury holder | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.China\u2019s recorded holdings of\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=14540\" 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