Foreign Holdings of US Debt Surge to Record High of $8.5 Trillion

In August, Japan increased its holdings of U.S. government debt by billions, while China decreased its exposure. The total foreign holdings of U.S. Treasury securities reached an all-time high of $8.5 trillion, up from $8.3 trillion the previous month and nearly 12% higher than the previous year. Japan remained the top holder with $1.12 trillion, adding $14 billion, while China reduced its stake by nearly $2 billion to $774.6 billion. The UK purchased over $15 billion, bringing its total to $743.9 billion. Other countries that increased their holdings included France, Switzerland, Belgium, and India. Canada and Germany reduced their holdings by $12 billion and $5 billion, respectively. Foreign markets bought $35 billion of T-bills, reaching a total of $306.9 billion. Yields on T-bills have remained strong despite interest rate cuts by the Fed. The overall Treasury market saw an increase in yields due to positive economic data and changing Fed policy expectations. The U.S. continues to see high demand for its Treasury securities, with foreign investors showing significant interest in recent auctions. The Treasury Department is expected to announce borrowing estimates for the next six months, with the national debt reaching $35.74 trillion as of October 16. We are currently encountering significant obstacles as our debt is projected to reach an unprecedented level as a percentage of the economy by 2027. What’s more concerning is the fact that we do not have a strategy in place to tackle our fiscal difficulties.

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