Credit Markets
Japan Overtakes China as Largest U.S. Bondholder
Japanese become biggest funders of American government for first time since 2008 financial crisis
By Min Zeng
April 15, 2015 4:29 p.m. ET
Photo: Tomohiro Ohsumi/Bloomberg News
Japan has overtaken China as the largest foreign owner of U.S. government bonds, for the first time since the 2008 financial crisis.
Japan owned $1.2244 trillion of U.S. government securities at the end of February, compared with $1.2386 trillion at the end of January, according to the latest monthly data released by the Treasury on Wednesday.
China, meanwhile, held $1.2237 trillion of Treasury debt at the end of February, compared with $1.2391 trillion a month ago.
China’s decadelong voracious demand for U.S. government debt has been shifting down amid its slowing economy.
Investors in Japan, on the other hand, have been snapping up U.S. bonds, lured by one of the most attractive yields in the developed world.
Foreign investors—including central banks, pension funds, money managers and insurance firms—own nearly half of U.S. government bonds outstanding, exerting powerful influence on the borrowing costs for the U.S. government, companies and households.
Wednesday’s Treasury data, which was released with a two-month lag, didn’t capture all the Treasury-bond holdings China may have parked with middlemen in places such as the U.K. and Belgium.
The Treasury says on its website that “it is difficult to draw precise conclusions about changes in the foreign holdings of U.S. financial assets by individual countries” from the capital-flow data.
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