US Treasury yields continued to rise on Friday as investors recognized the need for further rate hikes to curb inflation.
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Data from the US Treasury Department showed in July for the first time in eight months, while Japan reduced the US government’s debt load.
China’s treasures rose to $970 billion in July, from $967.8 billion in June, the lowest level since May 2010 when there was $843.7 billion.
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On the other hand, Japan reduced its Treasury holdings to $1.234 trillion in July from $1.236 trillion the previous month. Japan remains the largest non-US holder of the Treasures.
The drop in Japanese shares more or less matched moves in the currency markets. The yen was steady in July against the greenback, ending the month at 131.6 yen per dollar, from 135.22 yen at first.
The yen’s sharp fall against the dollar’s recovery this year has raised the prospect of Japan intervening in the market to prop up the Japanese currency. Since the beginning of 2022, the yen has fallen 19.5% against the dollar.
Overall, Treasuries’ holdings abroad increased to $7.501 trillion in July, from $7,430 trillion in June.
On a transaction basis, US Treasuries saw net foreign capital inflows of $23.12 billion in July, down from $58.9 billion the previous month. The US Treasury announced foreign capital inflows for the third consecutive month.
Inflows typically track price action in the Treasury market. The benchmark 10-year Treasury yield started July at 2.904% and ended the month at 2.642%.
In other asset classes, foreigners sold US stocks in July for the seventh straight month to $60.32 billion, from outflows of $25.36 billion in June. The July outflow is the largest since March.
US corporate bonds posted inflows in July of $8.78 billion, down slightly from $13.99 billion in June. Foreigners have been net buyers of US corporate bonds for seven consecutive months. .
Treasury data also shows that Americans are once again selling off their long-term foreign securities holdings, with net sales of $27.2 billion, from sales of $50.5 billion in June. .