On August 15 local time, the US Treasury Department released its Treasury International Capital Data (TIC Report) for June, revealing that foreign investors held a total of $9.1277 trillion in US Treasury securities as of June this year, representing an increase of $80.2 billion from the previous month.
China's holdings of US Treasury securities reached $756.4 billion, marking an increase of $100 million from the previous month. This represents China's first net purchase of US Treasury securities since March this year.
As of June, the top three regions holding US Treasury securities were Japan, the United Kingdom, and China, all of which increased their holdings during the month. Japan, as the largest overseas holder of US Treasury securities, currently holds $1.1476 trillion, an increase of $12.6 billion from the previous month, continuing its trend of consistently increasing US Treasury holdings this year.
The United Kingdom, the second-largest holder, currently holds $858.1 billion in US Treasury securities, representing a substantial increase of $48.7 billion from the previous month. China's holdings of $756.4 billion reflect an increase of $100 million from May.
Since April 2022, China's US Treasury holdings have remained below $1 trillion, generally showing a gradual reduction trend. Starting in March this year, China shifted from being the second-largest overseas holder of US Treasury securities to the third-largest.
**US Debt Surpasses $37 Trillion**
The US national debt recently surpassed $37 trillion, expanding at a pace far exceeding expectations and setting a historical record. What does $37 trillion mean? The Peterson Foundation notes that if this debt were distributed among American citizens, it would equate to $280,000 per household and $108,000 per individual.
Accompanying legislation that relaxed debt ceiling limits, tax cuts have eroded fiscal revenue, interest payments on national debt have soared, and the fiscal gap continues to widen. The Trump administration attempted to increase revenue through higher tariffs, but with limited success.
Facing debt and deficit pressures, President Trump has directed criticism toward the Federal Reserve.
**US Treasury Market Outlook**
Research indicates that once US equity market momentum weakens, risk appetite may decline, potentially leading to increased capital flows into US Treasury securities. The US economy will eventually experience some slowdown, and combined with risk appetite readjustment and rising expectations for interest rate cuts, demand for US Treasury securities may rebound.
Macro analysts believe that "stagflation concerns" triggered by tariffs persist, while fiscal sustainability faces new disruptions. The US Dollar Index may continue to weaken, and amid high volatility in both US stocks and bonds, a "triple threat" scenario affecting stocks, bonds, and currency may repeatedly emerge in pulse-like patterns.
As interest rate volatility and correlations between assets change, this will impact the "safety premium" of US Treasury securities.
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