The U.S. markets are waving goodbye to Asian capital. According to the US Commerce Department, Japan and China cut their holdings of U.S. Treasuries. Such a tendency started in early summer and sparked worries among private investors who decided to follow the example of Asian governments. The total net outflow of long-term U.S. securities and short-term funds such as bank transfers was $153.5 billion, after an inflow of $33.1 billion in May. The June figure and $40.8 billion in net selling of Treasury bonds are record high, the Treasury said.
“Right at the beginning of June, you had a very strong sell-off of Treasuries and that’s what frightened a lot of private investors,” Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York, said.
China’s holdings of U.S. Treasuries declined by $2.5 billion to $1.27 trillion, while Japanese holdings decreased $600 million to $1.22 trillion, a Treasury report showed.
Thus, China and Japan’s combined share of total foreign holdings of Treasuries dropped to 41.4% in June from 50.9% in August 2004.
