China and Japan Lead Foreign Buying of U.S. Treasury Debt in July

The U.S. Treasury has disclosed its monthly Treasury International Capital (TIC) report. Investors and economists use this barometer to determine which nations are buying or selling U.S. Treasury notes and bonds. This usually has a one-month lag and today’s report covers July.

In total, foreign Treasury debt purchases were up about $50 billion in July versus gains of more than $32 billion in June. It is probably important to realize that private foreign buying was $23.2 billion of that figure in July.

China remained the largest holder of U.S. Treasury debt and Japan is a close second. China’s Treasury debt holdings rose by $2.6 billion and sits right at $1.5 trillion. It has depleted about $17 billion in the month of June, so this was a small gain net-net. Japan’s Treasury holdings grew from $1.11 trillion in June up to $1.117 trillion in July. It is important to realize that China’s buying over the past year is down about 10% while Japan’s buying has been up 20%. Maybe Japan’s central banks hope that all that Yen strength will reverse and then it will make money on the foreign exchange. Maybe.

FULL REPORT

JON C. OGG