China Sold Treasurys for Third Month, Japan Bought
Author: Ian Talley; Tom Barkley</br></br>WASHINGTON--China appeared to be a net seller of U.S. Treasurys for the third month in a row during January, but remained the largest foreign holder, the Treasury Department said. Meanwhile, Japan continued its net buying of Treasurys, hitting another record.</br></br>Overall, foreigners were net buyers of long-term U.S. financial assets in January, according to the monthly Treasury International Capital report, known as TIC.</br></br>TIC data showed China slimmed its net holdings by $5.4 billion to $1.155 trillion in January, following net selling of $4.0 billion in December and $11 billion in November. The biggest owner of U.S. debt hit a record $1.175 trillion of holdings of U.S. Treasury securities in October. But China likely uses proxies in the U.K. and elsewhere to purchase Treasurys, making monthly TIC data an unreliable indicator of China's demand, many observers believe. The Treasury Department last month revised China's holdings of Treasurys upward by hundreds of billions of dollars, or nearly 30%, and cut the U.K.'s holdings by a similar amount.</br></br>Japan remained the second-largest foreign holder of Treasurys, boosting its holdings to $885.9 billion from $882.3 billion in December. Some in the market are concerned that, following a series of disasters beginning with Friday's earthquake, Japanese insurance companies will need to sell Treasurys to pay claims in the months ahead and that Japan's government will have less appetite for buying Treasurys. But Treasurys haven't been affected so far, and the ultimate impact of the disaster on U.S. government bonds is unclear.