China’s U.S. bond holdings rose for the first time in eight months, with the U.S. and China increasing dialogue and contact to ease confrontation and conflict.
Citing statistics on foreign capital balance (TIC) trends by the U.S. Treasury Department in November 2023, China’s U.S. bond holdings amounted to $782 billion, up $12.4 billion from $769.6 billion the previous month, it said.
Compared to the same month last year, the figure was 10.1 percent higher. As China’s U.S. bond holdings continued to decline, they reached the lowest level in 14 years and eight months in October last year.
China’s U.S. bond holdings have remained below $1 trillion for 19 months since April 2022.
Analysts say that China has been selling U.S. bonds to support the yuan’s value. “Even if U.S. bond holdings increase for one to two months, the trend of decline does not change,” the economist said. “China is busy boosting its economy. It is continuously reducing its holdings of U.S. bonds while trying to defend the yuan.”
As of the end of November, each country’s U.S. bond holdings amounted to 7.80 trillion dollars, up 243.4 billion dollars from 7.56 trillion dollars in October, up 3.2 percent. The increase was the highest ever in three months. The increase was 7.6 percent year-on-year.
It is largely affected by the interest rate reversal, which began in October 2023 and continued in November, and foreign investors are targeting low interest rates.
The yield on the 10-year U.S. bond, a long-term interest rate indicator, fell 44 basis points, or 0.44 percentage points, to 4.35% at the end of the month from 4.791 percent in early November.
Japan, the world’s largest U.S. bond holder, stood at $1.1275 trillion, up $29.3 billion from $1.98.2 trillion the previous month and 2.67% higher. It is the largest since December 2021.
