This post is a guest contribution by Asha Bangalore of The Northern Trust Company.
Foreign holdings of U.S. Treasury securities have grown to $4.065 trillion in July 2010 from $2.21 trillion in August 2007, the month the financial crisis unfolded. In other words, there has been a nearly 85% increase in foreign holding of Treasuries over the past three years.
During this period, the Japanese and Chinese holdings of U.S. Treasuries have shown a noticeable change. Japan’s holdings of U.S. Treasuries in July 2010 are 20.2% of the total held by foreigners, while that of China is 20.8%. This is vastly different from ownership status when the crisis commenced; Japan was the largest holder of U.S. Treasuries, about a third of the total (see chart 2). China’s acquisition of U.S. Treasuries has risen in only three out of the seven months ended July 2010. Japan and China hold roughly 41% of U.S. Treasuries held by foreigners. Foreigners hold about 47% of total Treasuries outstanding as of July 2010, which is close to the percentage recorded in August 2007 (43%).
Source: Asha Bangalore, Northern Trust, Daily Global Commentary, September 16, 2010.
