The U.S. Treasury Department publishes a monthly report known as the Treasury International Capital (TIC) Report, which provides information on foreign holdings of U.S. Treasury securities.
Japan and China are traditionally the largest foreign holders of US Treasury securities. These holdings are important because they indicate the confidence these countries have in the US economy. When Japan and China buy US Treasury bills, they are effectively lending money to the US government and show their confidence in the stability of the US economy.
However, both Japan and China continue to reduce their holdings of U.S. Treasuries, which could point to different economic scenarios. This could be a sign that these countries are diversifying their foreign exchange reserves from the US dollar, or a sign of declining confidence in the US economy. It could also signal domestic economic shifts in Japan and China, triggering the sale of foreign exchange reserves.
This article, “Moving Sand: Japan and China’s US Treasury Holdings Declining,” was first published on CryptoSlate.