Foreign holdings of US Treasury debt rise 1 per cent to $5.65 trillion in September

WASHINGTON – Foreign buyers of U.S. Treasury securities increased their holdings in September, suggesting many shrugged off budget battles in Washington to keep investing in U.S. debt.

Ttotal foreign holdings rose 1 per cent September to $5.65 trillion, the Treasury Department reported Monday. That follows a 0.03 per cent gain in August.

Holdings had fallen from April through July, possibly reflecting concerns about rising interest rates. In September, holding were 1.2 per cent below the record high of $5.72 trillion reached in March.

China, the largest foreign buyer of Treasury debt, boosted its holdings 2 per cent in September to $1.29 trillion. Japan, the second-largest buyer, increased its holdings 2.5 per cent to $1.18 trillion.

An impasse over the budget led to a 16-day partial shutdown of the federal government in October. And lawmakers didn’t reach an agreement to raise the nation’s borrowing limit until Oct. 16 — one day before a deadline that, if compromised, would have increased the risk of a default on U.S. debt.

The government re-opened on Oct. 17 after Congress passed legislation to fund the government through Jan. 15 and allow the Treasury to borrow money until Feb. 7. A House-Senate conference committee is working to try to resolve disagreements on spending and tax issues in the hopes funding the government for the full budget year, which runs through Sept. 30.

The September foreign holdings report also noted that the Caribbean banking centre countries, which include the Bahamas, Bermuda and the Cayman Islands, trimmed their holdings 0.3 per cent to $300.9 billion. Brazil reduced its holdings 1.5 per cent to $249.2 billion.