China cuts U.S. Treasuries to 18-year low, 30-year yield rises
China's U.S. Treasury holdings fell to $633.4 billion in June from $659.3 billion in May, while the 30-year Treasury yield reached 5.31%, the highest since June 2007.
China has drastically cut down its U.S.
Treasury holdings, reaching a nearly 18-year low in June, as 30-year Treasury yields jumped to 5.31%, the highest since June 2007.
Amid rising geopolitical tensions and increasing uncertainty over U.S. policy, Beijing is diversifying its foreign exchange reserves.
According to the U.S.
Treasury Department, China’s holdings fell to $633.4 billion in June from $659.3 billion in May, marking their lowest level since September 2008.
Other major Treasury holders, including Japan and the United Kingdom, also reduced their holdings.
Japan’s holdings fell to $1.12 trillion in June from $1.14 trillion in May, while the UK’s holdings dropped to $939.9 billion from $948.6 billion.
Overall, foreign holdings of U.S.
Treasuries fell to $9.299 trillion in June from $9.371 trillion in May.
China dropped to the third-largest foreign holder in March last year, continuing a trend that began during President Donald Trump ’s first tenure.
Despite selling off U.S. debt, China has been steadily increasing its gold reserves, viewed as a safeguard against geopolitical and financial risks.
The People’s Bank of China has raised its bullion holdings for the 21st consecutive month in July, totaling 76.08 million troy ounces.
This move by China is not sudden.
In May 2026, China has been aggressively reducing its holdings of U.S. sovereign debt to levels unseen since the global financial crisis.
This has intensified a historic fixed-income sell-off, pushing the 10-year Treasury yield towards the critical 5% threshold.
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Treasuries have declined, adding to concerns about the depth of overseas demand for U.S. government debt.
In March, foreign holdings of U.S.
Treasuries fell by $139 billion, marking the "largest monthly decline since September 2022." Japan, the top foreign holder, reduced its stockpile by $48 billion to fund yen interventions.
However, the most significant structural shift came from Beijing.
Late last month, Washington and Tokyo stepped in to support the Japanese yen, marking their first joint yen-buying intervention since 1998.
The move also fueled speculation that U.S. involvement could help ease selling pressure on U.S.
Treasuries.
30-Year Treasury Yield Hits 19-Year High The 30-year Treasury yield hit 5.31% on Monday, its highest level since June 2007, as investors demanded greater compensation for long-term debt amid deficit and borrowing concerns.
The iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT ) also fell to its lowest level since June 2004.
Meanwhile, the U.S. national debt is nearing $40 trillion, intensifying concerns over government borrowing, inflation and fiscal sustainability.
The July budget deficit hit a record $432 billion, adding to pressure on Treasury markets.
Charlie Bilello, chief market strategist at investment firm Creative Planning, warned that the combination of rising debt and persistent government spending could keep borrowing costs elevated and create broader risks for the economy and financial markets.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published editors.
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