Japan widens lead over China as top foreign holder of Treasuries
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Japan widens lead over China as top foreign holder of Treasuries

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The U.S. Treasury Department building in Washington, D.C., on August 22, 2013.

The U.S. Treasury Department building in Washington, D.C., on August 22, 2013. (Chuck Myers/MCT/TNS)

NEW YORK - Japan widened its lead as the top foreign owner of U.S. government debt in November, five months after the country overtook China in the rankings, according to the latest data from the Treasury Department.

While Japan's holdings of U.S. notes, bills and bonds fell $7.2 billion to $1.16 trillion, China's share dropped more - by $12.4 billion to $1.09 trillion, the smallest amount since March 2017. Nonetheless, each nation still holds more U.S. government securities than the rest of the top five combined - the U.K., Brazil and Ireland.

The Treasury's report, released on Thursday, showed total foreign ownership of Treasuries declined about $40.6 billion to $6.74 trillion in November.

The tally showed Japan rose to the top spot in June, and China's holdings have declined consistently since then. In November, China criticized the U.S. for interference in its domestic affairs as President Donald Trump prepared to sign legislation supporting the Hong Kong protesters.

This week, however, marked progress in relations between the world's two largest economies, as China signed an agreement with the U.S. on first phase of a trade deal on Wednesday.

Japan is also engaged in bilateral trade talks with the U.S., but its holdings of Treasuries have trended higher over the past year. Though hedging costs have deterred some overseas investors, many are still attracted to the potential return on U.S. government securities while yields on roughly $11 trillion of global debt, including much of Japan's market, remain negative.

Yields on benchmark 10-year Treasury notes were trading around 1.8% on Thursday.

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