Key Insights:
- Foreign holdings of US Treasuries decreased by $50.4 billion in July.
- China reduced its portfolio to the lowest amount since August 2008.
- Japan lowered its exposure while overall international capital inflows remained positive.
Figures published by the US DAO controls and spends.">Treasury on Sept. 16 revealed a steep decline in foreign DAO controls and spends.">Treasury holdings throughout July. Aggregate holdings fell by $50.4 billion, bringing the total to $9.248 trillion—the lowest reading since October 2025. This decrease was driven in part by reductions from both China and Japan.
While international buyers continue to play a vital role in US government debt markets, the July figures did not indicate a widespread flight from American assets.
Data from the DAO controls and spends.">Treasury International Capital showed a total net inflow of $83.7 billion during the month. Furthermore, July holdings stayed above the $9.110 trillion recorded during the same period a year earlier, suggesting short-term portfolio adjustments rather than a permanent annual withdrawal.
US Treasury Holdings Fall for Fourth Month in Five
The Treasury’s Major Foreign Holders table documented four monthly drops within the five months leading up to July. Overall foreign holdings declined by $239.2 billion compared to February’s peak of $9.487 trillion.
Japan kept its spot as the leading foreign holder despite cutting its holdings by $12.8 billion. Its total finished July at $1.104 trillion, marking the lowest level since January 2025. Japan had previously held $1.239 trillion in February before steadily paring down its stake.
China remained the third-largest holder behind the United Kingdom. Mainland China trimmed its holdings by $15.4 billion down to $618 billion in July. Historical US Treasury data confirmed this was the lowest figure recorded since August 2008, down from $695.3 billion at the beginning of 2026.
Conversely, the United Kingdom moved in the opposite direction in July, expanding its holdings by $58.4 billion to reach $998.3 billion and partially balancing out reductions elsewhere.
China and Japan Reductions Do Not Equal Direct Treasury Sales
Treasury representatives warned against interpreting country-specific figures as direct evidence of buying or selling activity. Because monthly figures rely heavily on custodial reporting, ultimate ownership can sometimes be misstated.
Foreign investors frequently hold securities via custodians situated in different regions. This structural arrangement can alter how a country is attributed without modifying the actual economic owner.
Researchers at the US Treasury and Federal Reserve also differentiate between actual transactions and valuation shifts. Price fluctuations can impact the reported market value of long-term securities without necessitating corresponding net sales.
The July flow figures clearly highlighted this distinction. International residents acquired $40.6 billion worth of long-term US securities during the month and boosted their Treasury bill holdings by $38.8 billion.
Private foreign investors reported $3.7 billion in net sales of long-term US securities, whereas foreign official institutions registered $44.4 billion in net purchases over the same timeframe. Meanwhile, foreign official Treasury holdings dropped by only $5 billion within the monthly holder tables.
US Treasury Yields Keep Funding Pressure Elevated
On Sept. 16, the Federal Reserve increased its target rate range by 25 basis points following a unanimous vote, placing the new federal funds range at 3.75% to 4.00%.
Treasury market rates stayed high in the wake of this policy shift. Official yield curve data from Sept. 18 placed the 10-year yield at 5.01% and the 30-year yield at 5.34%.
Elevated borrowing costs remain significant because federal interest expenses continue consuming a larger share of the national budget. The Congressional Budget Office estimated roughly $1 trillion in net interest spending for the 2026 fiscal year, representing approximately 3.3% of gross domestic product under its February baseline.
The budget agency projected that net interest expenses would continue to climb through 2036, driven by higher average borrowing rates and an expanding debt load. These projections were based on laws active through Jan. 14, meaning subsequent policy changes could shift the final outcomes.
Treasury Data Adds Another Macro Variable for Bitcoin
Figures from CoinGecko indicated that Bitcoin closed trading on Sept. 19 close to $80,874, rising from $76,147 on Sept. 16. This price movement followed the release of the latest US Treasury figures alongside the Federal Reserve’s monetary policy announcement.
This timing does not establish direct causation between Treasury holdings and Bitcoin’s price trajectory. Cryptocurrency values are simultaneously influenced by monetary policy shifts, liquidity expectations, market positioning, and general risk tolerance. Such distinctions are crucial for analysts utilizing Treasury International Capital statistics as a macro indicator.
Even so, ongoing tightness within government debt markets can influence broader financial conditions across various asset classes. Higher yields increase potential returns on dollar-denominated fixed income assets, which may sway capital allocation away from or toward riskier, high-volatility markets.
The next key data release is scheduled for Oct. 16, when the US Treasury will publish the August Treasury International Capital report, allowing market participants to determine whether July’s downward trend in holdings persisted.
FAQ
- How much did foreign US Treasury holdings drop in July?
Foreign holdings dropped by $50.4 billion down to $9.248 trillion. - What were China and Japan’s holdings?
China cut its holdings to $618 billion, while Japan reduced its exposure to $1.104 trillion. - Did foreign investors completely exit US assets?
No, overall net inflows reached $83.7 billion, driven by strong purchases of long-term securities and Treasury bills. - When is the next Treasury International Capital data release?
The US Treasury will publish the August TIC data on October 16.
Arnold Kirimi 
