By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) -Foreign holdings of U.S. Treasuries increased in May to top $9 trillion for a third straight month, data from the Treasury Department showed on Thursday, with buyers, other than China, flocking back in after tariff turmoil led to outflows in April.
Holdings of U.S. Treasuries rose to $9.045 trillion, up from April’s level of $9.013 trillion, and up 11.2% from a year earlier. In March, Treasuries held by foreigners hit a record $9.049 trillion.
On a transaction basis, foreigners bought $146 billion worth of U.S. Treasuries in May, compared with an outflow of $40.8 billion in April as President Donald Trump’s back-and-forth tariff policy roiled markets.
Tariffs were announced on April 2, causing a tumble in equities and the dollar and massive volatility in U.S. Treasuries.
Treasury debt buying by foreigners in May was the largest since August 2022.
China, the third largest Treasuries holder, further reduced its holdings to $756.3 billion in May, the lowest since February 2009 when the country’s stock of Treasuries dropped to $744.2 billion. Its holdings declined for a fourth straight month and were far below their peak of more than $1.3 trillion between 2012 and 2016.
The world’s second largest economy has been selling Treasuries to bolster its currency, the yuan. Analysts said a slowing Chinese economy, post-COVID industrial challenges, and trade barriers have reduced China’s dollar inflows from exports.
Japan remained the largest non-U.S. holder of Treasuries, with a record $1.135 trillion in May.
UK investors, the second largest owner of U.S. government debt, raised their pool of Treasuries to an all-time peak of $809.4 billion, up from $807.7 billion in April.
The UK overtook China as the second largest non-U.S. holder of Treasuries in March. The UK is typically viewed as a custody country, which is generally a proxy for hedge fund investments. Other countries used by hedge funds for custody services include the Cayman Islands and the Bahamas.
In May, Canadians increased their Treasuries holdings to $430.1 billion from $368.4 billion. That was a turnaround from April when they were the biggest sellers of U.S. government debt as Trump hit Canada with tariffs on steel, aluminum and automobiles.
Foreign investors also poured back into U.S. equities, with massive inflows of $114.3 billion in May, from an outflow of $18.8 billion in April.
Data also showed the net capital inflow into the United States totaled $311.1 billion in May, compared with an outflow of $14.6 billion in April. The May inflow was the largest since September 2024.
After including adjustments, such as estimated foreign portfolio acquisitions of U.S. stocks through stock swaps, overall net foreign inflows into long-term securities hit a record $259.4 billion in May.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chris Reese and Sonali Paul)
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