Foreign holdings of U.S. Treasury securities fell in March 2026, with Japan and China leading the decline. Figures reported from the Treasury Department’s May 18 release put total overseas holdings at about $9.35 trillion, down from February’s record of about $9.49 trillion.
Japan remained the largest foreign holder, with its recorded position falling by $47.7 billion to approximately $1.192 trillion. China’s reported holdings dropped about 6%, from $693.3 billion to $652.3 billion, their lowest level since September 2008.
The United Kingdom’s reported holdings rose from $897.3 billion to $926.9 billion. It remained the second-largest foreign holder, ahead of China. Country totals include both official and private holdings, rather than central-bank reserves alone.
Valuation losses account for much of the decline
The decline in portfolio values cannot be treated as an equivalent amount of selling. Holdings figures incorporate both transactions and changes in bond prices, and the March data were reported to include $142.1 billion in valuation losses on foreign investors’ long-term Treasury holdings.
Transaction figures showed a different pattern: foreign investors sold a net $16.8 billion of Treasury bills while making reported net purchases of $13.5 billion in longer-term Treasuries.
The decline came amid rising oil prices during the U.S.-Iran conflict and pressure on Asian currencies. Frederic Neumann, HSBC’s chief Asia economist, linked lower central-bank holdings to financial volatility surrounding the Gulf conflict and pressure on exchange rates, particularly in Asia.
Neumann said currency intervention would have led some central banks to sell part of their Treasury portfolios. He also described moves into cash-like assets during market stress as a way for reserve managers to prepare for possible intervention.
Japan’s official intervention record
Japan’s Ministry of Finance reported on May 12 that foreign-exchange intervention totaled ¥0 between January and March 2026. A separate release dated April 30 recorded ¥0 in intervention from March 30 through April 27.
Those official records contradict the account of intervention in late March and early April. Japan’s lower Treasury holdings do not establish that it sold securities to finance yen intervention.
More broadly, the holdings figures alone do not identify the reasons for individual countries’ portfolio changes or show how their reserve managers are balancing dollar assets against inflation risks and domestic currency needs.
Custody data limit conclusions about China
China’s directly reported Treasury holdings have declined from a peak of roughly $1.3 trillion in 2013. However, holdings recorded under China do not necessarily capture every Treasury security owned by Chinese investors.
The Treasury cautions that its country figures rely primarily on custodial reporting. Securities held through accounts in another country, or managed by foreign portfolio managers, may not be attributed to their ultimate owners.
Tianchen Xu, a senior economist at the Economist Intelligence Unit, said an assessment including indirect holdings through custody centers suggested China’s aggregate exposure was comparatively steady. Belgium’s recorded holdings were $454.0 billion in March, little changed from February; Luxembourg was another custody location considered in that assessment.
The custody figures do not establish how much of either country’s total belongs to Chinese investors. A decline in holdings recorded under China therefore does not, by itself, establish an equivalent reduction in China’s total Treasury exposure.
The next Treasury International Capital release, covering April 2026, was scheduled for June 18.
