Foreign governments have been offloading their US bond holdings at a record pace.

The chart above, via Goldman Sachs, shows a sharp acceleration in the selling of Treasury debt during 2016 by “official institutional” investors, including foreign central banks.

Goldman’s figure to not break down just who is dumping US debt, but data out at the end of last year revealed that Japan had usurped China as the biggest international holder of Treasuries.

The election of Donald Trump has sparked a sell-off in long-dated debt, as the prospect of rising global inflation makes bonds a less attractive proposition for creditors (inflation eats away at prospective returns).

In China meanwhile, Beijing’s efforts to defend the renminbi has helped push down its bumper foreign exchange reserves. China and Japan account for 37 per cent of the total $6tn of holdings tracked by the Treasury and Federal Reserve.

Get alerts on Goldman Sachs Group when a new story is published

Copyright The Financial Times Limited 2021. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article