Recent data released by the Federal Reserve revealed a $3.6 billion increase in U.S. securities held for foreign central banks, while foreign banks’ holdings of U.S. Treasury debt fell by $589 million.
Additionally, foreign banks’ holdings of securities guaranteed or issued by Fannie Mae and Freddie Mac, America’s largest mortgage financing agencies, increased by $4.9 billion to reach $302 billion. The Fed data also revealed that “other” securities, which include corporate bonds, asset-backed securities, commercial paper, supranationals and U.S. Treasury securities, fell by $769 million, Reuters reports.
Foreign central banks, especially those in Asia, have increased their U.S. debt-buying in the past few years, and overseas central banks hold more than one-quarter of marketable Treasuries. The People’s Bank of China and Bank of Japan are the biggest foreign holders of U.S. Treasuries.