US Stock Market: Foreign holdings of US Treasuries fall in March as Japan, China cut exposure

Foreign holdings of U.S. Treasuries declined in March from the record levels seen a month earlier, reflecting reduced exposure from major overseas investors such as Japan and China, according to data released by the U.S. Treasury Department on Monday, as per a news report by Reuters.

Total foreign-owned U.S. Treasury holdings fell 1.5% to $9.348 trillion in March from an all-time high of $9.487 trillion in February. Despite the monthly decline, foreign holdings were still 3.3% higher compared with the same period a year ago.

Japan retained its position as the largest foreign holder of U.S. government debt, although its holdings dropped sharply during the month. Japanese Treasury holdings declined nearly 4% to $1.192 trillion in March from $1.239 trillion in February. Japan’s holdings remain below the peak level of $1.325 trillion recorded in November 2021.


China, the third-largest overseas holder of U.S. Treasuries, also reduced its exposure significantly. Its holdings fell 6% month-on-month to $652.3 billion from $693.3 billion in February. According to Reuters, this marked China’s lowest Treasury holdings since September 2008. China’s Treasury portfolio has now declined more than 14% since the beginning of 2025.

Meanwhile, the United Kingdom increased its Treasury holdings by 3.3% to $926.9 billion in March from $897.3 billion in the previous month. According to the report, the UK is widely considered a key custody center for global investors, with flows through the country often interpreted as a reflection of hedge fund positioning and broader international investment activity.

The Treasury data also showed continued foreign interest in U.S. financial assets during March. Treasury securities recorded net inflows of $13.5 billion, an increase from $2.6 billion in February.

Demand for U.S. corporate bonds strengthened further, with inflows rising to $76.8 billion in March from $53.9 billion a month earlier. U.S. equities also attracted foreign investment, although inflows slowed to $10.5 billion from $23.8 billion in February.

Overall net capital inflows into the United States stood at $150.7 billion in March, compared with $182.7 billion in the previous month, indicating a moderation in foreign capital movement into U.S. assets.