On Thursday (November 16) local time, the U.S. Department of the Treasury released the International Capital Flows Report (TIC) for September 2023. The report shows that Japan, China and the United Kingdom, the top three overseas "creditors" of the United States, all reduced their holdings of U.S. Treasury bonds in September, pushing the scale of U.S. Treasury bonds held by overseas investors that month to the lowest level since May.

Among them, China’s holdings of U.S. Treasury bonds decreased by US$27.3 billion in September.For the sixth consecutive month, positions have been reduced, with total positions falling to US$778.1 billion from US$805.4 billion last month, continuing to hit a new low since May 2009.

Since April last year, China’s U.S. debt holdings have been below $1 trillion, and this is the first time in 14 years that this number has fallen below the $800 billion mark.

As of February this year, China had reduced its holdings of U.S. debt for seven consecutive months, with its total holdings hitting record lows since May 2010. Although China once increased its holdings of U.S. debt in March, in hindsight this was obviously just an "episode" in the overall reduction process, because since then China has quickly launched a new round of reductions in U.S. debt holdings.

Overall, China is obviously not alone in the "global camp" that reduced its holdings of U.S. debt in September, because the top three overseas "creditors" of the United States, including China, all sold off U.S. debt in a large amount in September...


Japan was still the largest overseas holder of U.S. Treasury bonds in September, but its holdings of U.S. Treasury bonds decreased by US$28.5 billion month-on-month, with the total amount falling to approximately US$1.09 trillion. This is Japan's largest single-month reduction in U.S. debt holdings since April.

As the third largest overseas "creditor" of the United States, the United Kingdom also further reduced its holdings of U.S. Treasury bonds by US$29.2 billion in September, reducing its holdings to US$668.9 billion. Previously in August, the UK had increased its holdings by US$35.7 billion.

Against the background of the large-scale reduction of holdings by the top three overseas "creditors", the overall size of U.S. Treasury bonds held by foreign investors fell to US$7.605 trillion in September from US$7.707 trillion last month, breaking the previous three consecutive months of rising momentum.

In terms of U.S. bond trends, due to concerns about the increase in the supply of Treasury bonds and the Federal Reserve's long-term maintenance of higher interest rates to curb inflation, U.S. bond yields rose sharply in September, which kicked off the "selling storm" of U.S. bonds this autumn. The 10-year U.S. Treasury yield, "the anchor of global asset pricing," hit a 16-year high of 5.02% in mid-October.

Other highlights from the TIC report

The International Capital Flows Report (TIC) released by the U.S. Treasury Department also showed that all foreign countries had a net outflow of US$67.4 billion in long-term and short-term securities and bank flows in the United States in September, ending the previous three consecutive months of net inflows. Among them, the net outflow of foreign private funds was US$62.1 billion, and the net outflow of foreign official funds was US$5.3 billion.

In September, foreign residents reduced their holdings of long-term U.S. securities - with net sales of $2.4 billion. Among them, net sales by foreign private investors were US$3.5 billion, while net purchases by foreign official institutions were US$1.1 billion. U.S. residents reduced their holdings of long-term foreign securities, with net sales of $700 million.

If both international long-term securities and U.S. long-term securities are taken into account, overseas net sales of U.S. long-term securities in September were 1.7 billion.

Foreign residents increased their holdings of U.S. Treasury securities by $24.7 billion in September, and foreign residents' holdings of short-term U.S. dollar-denominated securities and other custody liabilities decreased by $28.6 billion. The U.S. banking system's own net dollar-denominated liabilities to foreign residents fell by $37 billion.