14 35 1LINKEDINCOMMENTMORE
Japan is now the largest foreign holder of U.S. Treasury securities, surpassing China, according to the Treasury department.
As of the end of February, Japan held $1,224.4 billion of U.S. government securities, up from $1,210.8 billion a year earlier. China held $1,223.7 billion, down from $1,272.9 billion a year earlier.
Low interest rates around the world have made Treasuries extraordinarily popular. In Japan, the government 10-year note yields 0.32%, vs. 1.89% for the bellwether 10-year T-note. The German 10-year government bond yields just 0.11%, according to FactSet.
Treasuries would become even more popular if the Federal Reserve raises short-term interest rates later in the year, as expected. Short-term rates in Switzerland, Sweden, Japan and most of Europe are negative.
Countries that buy large amounts of Treasuries often have another goal in mind: Driving down the value of their currency relative to the dollar. Pushing down the yen, for example, makes Japanese imports cheaper in the U.S., and U.S. exports more expensive in Japan.
China, however, has been selling some of its reserve to bolster its currency. The People's Bank of China spent an estimated $231 billion last month to bolster the Chinese yuan, according to The Wall Street Journal.
Foreigners own about 47% of the $13.1 trillion of U.S. Treasury debt outstanding. The majority of U.S. Treasury debt is owned by U.S. investors, pensions and the Federal Reserve. Another $5.1 trillion of federal debt is considered intergovernmental holdings, mainly securities owned by the Social Security trust fund.