Japan and China lead foreign central banks' retreat from US Treasuries
Foreign official institutions cut their holdings of US Treasuries in March, with China's stockpile falling to an 18-year low. CNBC reports that the broader retreat, led by Japan and China, accelerated as the US-Iran conflict pushed crude prices higher and weakened Asian currencies. The 30-year yield closed near 5.19%, its highest since before the financial crisis.
Treasury International Capital data showed that foreign official institutions trimmed their US Treasury positions for a second straight month in March. CNBC reports that China's holdings fell to an 18-year low, while Japan was also a net seller across the period.
The retreat coincides with the US-Iran conflict, which has pushed crude prices higher and sent the yen and other Asian currencies sharply lower. Central banks under pressure to defend their currencies have leaned on dollar reserves, intervening in foreign exchange markets and reducing exposure to long-dated US debt.
The response in long-end yields has been steep: the 30-year Treasury yield closed near 5.19%, its highest since 2007 and a level not seen since before the global financial crisis. The fading foreign bid is forcing the White House to confront rising borrowing costs and reigniting a debate over structural shifts in global debt markets.
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