FOREIGN holdings of U.S. Treasuries rose 3.4% in February, data from the Treasury Department showed on Wednesday, with the two largest owners, Japan and China, building up their U.S. debt holdings.
Total overseas holdings of U.S. Treasuries amounted to $8.817 trillion, up from $8.527 trillion in January, the monthly Treasury International Capital System report showed. Compared with a year earlier, Treasuries owned by foreigners rose $818 billion, or 10.2%.
In September, foreign-held Treasuries hit a record of about $8.688 trillion.
While the TICS report is dated, it is notable that Japan, and especially Trump’s primary tariff target China, built their holdings in the run-up to the tariff-themed financial market crisis over the last two weeks.
“In particular Japan and China have a lot to lose if they were to decide to sell Treasuries and make it known that they’re selling Treasuries,“ said Lou Brien, market strategist at DRW Trading in Chicago. “That would be a very bad day for the Treasury.”
Japan held $1,125.9 trillion in Treasury Securities in February, up from $1,079.3 the month before. China held $784.3 billion, up from $760.8 billion. Of the top 20 foreign holders, only Switzerland, Norway, Germany and Saudi Arabia reduced their holdings.
The trade policy rollercoaster brought much talk of overseas investors reducing their dollar and U.S. debt positions, but the data from April won’t be available to shed light on that until June.
“The story of trying to de-dollarize is probably still something that we should all keep in mind,“ Brien said. “But certainly the February TIC data doesn’t suggest any problem with that.”
The benchmark 10-year note rallied in February and its yield fell almost 34 basis points, ending the month at 4.229%. By late March yields had climbed back to 4.40%. Last week, they hit 4.59% in a wild Treasury selloff prompted by U.S. President Donald Trump’s chaotic back and forth on tariffs.
The Treasury reported that the sum total in February of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $284.7 billion. Of this, net foreign private inflows were $229.3 billion, and net foreign official inflows were $55.4 billion.
Foreign residents increased their holdings of long-term U.S. securities; their net purchases were $142.7 billion. Net purchases by private foreign investors were $166.1 billion, while net sales by foreign official institutions were $23.4 billion.
U.S. residents increased their holdings of long-term foreign securities, with net purchases of $30.7 billion.
