China and Japan Dumping Treasuries

For months the financial press has reported that China has been “dumping” U.S. Treasury securities, but until I looked up the official figures for our forthcoming episode of the Lara-Murphy Show, I didn’t realize just how much Japan has been selling Treasuries as well.

I made the chart above from the figures at this official Treasury website. Yes, from its peak in June 2015, Chinese holdings of Treasuries (as of February 2016) were down about $19 billion. But Japan’s holdings that month were down about $92 billion, a fall of 7 percent, from March 2015.

[NOTE: In the above chart, the y-axis starts at $1,000 billion (i.e. $1 trillion). That’s the way Excel automatically generated the chart, and I left it like that so you could see the movements over time and gauge how much more Japan has sold than China. So don’t be misled visually into thinking Japan sold a huge fraction of its total holdings.]

Both China and Japan are engaged in monetary operations to affect the value of their currencies, and so perhaps the above movements are just a short-term blip on the path of ever higher holdings. Or, perhaps those who have been warning against massive U.S. government deficits–saying that eventually the rest of the world would wisen up and stop the gravy train–had a point.