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Foreign Holdings of U.S. Government Debt Decrease in September

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Andrew R. Michaud

November 16, 2023

Foreign holdings of U.S. government debt decreased in September, putting an end to three consecutive months of increases, according to data released by the Treasury Department on Thursday.

In September, the total foreign ownership of U.S. Treasuries fell to $7.605 trillion, down from $7.707 trillion in August. This represents the lowest level since May, when foreign ownership was recorded at $7.52 trillion.

This decline is notable as there has been a noticeable absence of foreign central banks and non-U.S. private investors in Treasury auctions. For instance, the most recent 30-year auction witnessed indirect or foreign bidders taking 60.1% of the debt offered, compared to an average of 69.3% seen in the past six similar auctions.

Among foreign investors, Japanese investors have historically been the most active buyers of U.S. government bonds. However, as of September, their ownership of Treasuries stood at $1.1 trillion, marking the lowest level since March this year based on Treasury data.

Although total foreign Treasury holdings are still higher compared to a year ago, the latest data supports the narrative that foreign investors are beginning to step back.