Foreign governments pulled back their purchases of longer-term U.S. debt as trade tensions escalated around the world.
The declines are relatively small so far for notes and bonds — just shy of $5 billion each for March and April, the most recent months for which Treasury data are available — but it signals a potentially troubling trend.
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One of the most glaring declines has come from Russia, which sliced its holdings of U.S. debt nearly in half from March to April, from $96.1 billion to $48.7 billion. Russia's Treasury ownership peaked at $108.7 billion in May 2017.
In all, foreigners held $6.17 trillion of the total $14.84 trillion of Treasury debt outstanding through April. The national debt including intragovernmental holdings has swelled to more than $21 trillion.
Russia isn't the only country cutting back in its U.S. holdings.
China, the largest owner of U.S. debt, reduced its level by $5.8 billion in April to $1.18 trillion, while Japan, the second largest, cut its holdings by $12.3 billion to $1.03 trillion. Ireland, the U.K. and Switzerland also pulled back.
When counting all securities (including T-bills), the April decline came to $47.6 billion, a 0.8 percent reduction from March.
Finding buyers for government debt has become increasingly important since the Federal Reserve halted its bond-buying program in October 2016 after swelling its holdings to more than $4.2 trillion.
Since October 2017, the central bank has been allowing a set level of proceeds it gets from those debt instruments to run off each month, while continuing to reinvest the rest. The Fed's portfolio of Treasurys and mortgage-backed securities since then has declined by $116 billion, or 2.8 percent, while foreign holdings also have fallen off by 2.5 percent.
With the budget deficit expected to rise in coming years — passing $1 trillion in 2020, according to Congressional Budget Office estimates — the government has been issuing debt heavily. The total for 2018 has been $443.7 billion, a nearly ninefold increase from the same period a year ago and a 139 percent jump from 2016, according to the Securities Industry and Financial Markets Association.
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https://www.cnbc.com/2018/06/18/russ...r-us-debt.html
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