Who holds U.S. Treasuries?

Everyone is talking about Treasuries. They’re the global safe asset. As long as governments and financial institutions build their portfolios around them, dollar dominance will last. This week, however, King Dollar has taken a beating from King Donald. As the editorial of the Financial Times has noted, “Trump’s blunderbuss efforts to reset global trade rattled all the pillars expected of a reserve currency: stability, reliability, robust policymaking and the rule of law.” And yet, today’s auction of 30-year bonds went smoothly. High time for a closer look at the data. Although the bond market is generally not very transparent, public data on the global distribution of Treasury holdings is excellent. I’ll start with a quick look at global official reserve holdings, then will zoom in on the holder structure of U.S. government debt.

Currency composition of official reserves

Global official reserve holdings are tracked by the IMF’s Composition of Official Foreign Exchange Reserves dataset (COFER), which provides globally aggregated data. Panel A in Figure 1 shows global official FX reserves increased 10-fold between 1999 and 2020, from $1.25 trillion to $12 trillion. That is the famous official foreign reserve glut, fueled by the aftershock of the Asian financial crisis and by the massive trade surpluses of, first and foremost, China and Japan. Panel A also shows that the total volume of U.S. dollar reserves has seen a moderate decline in recent years.

Figure 1: Volume and composition of global official reserves

Regarding the composition of those global reserve holdings, the picture is one of incremental change. As shown in panel B, the share of U.S. dollar share has fallen, but only modestly, from 71% in 1999 to 58% today. What is more, the 1999 value marked an all-time high—in 1995 (not visible here), the U.S. dollar share was 59%.

The emergence of the Australian and Canadian dollars, and of the Chinese Renminbi, indicates a clear trend towards diversification of official reserve portfolios. However, this is aggregate data—it may obscure shifts that become visible only at a more granular level.

Global holders of U.S. Treasuries

If we want to know more about individual countries’ holdings of U.S. securities, we need Treasury International Capital (TIC) data. The historical file is updated annually and is available here. The latest version was released in April 2024). TIC data is an invaluable resource—no other single file contains more information about the finance-geopolitics nexus. (Unfortunately, it is also an untidy mess.)

In Figure 2, I have aggregated countries into groups that I think make the most sense. Besides China and Japan, I am putting the emphasis on offshore financial jurisdictions (Anglo: UK & British Overseas; Europe: Benelux, Ireland, Switzerland; Asia: Hong Kong-Singapore), as well as on the oil-exporting countries. These groups together hold three quarters of foreign-held Treasuries.

The TIC data makes a distinction between Treasuries with long (maturity of one year or more) and short remaining maturities. Short-dated Treasuries account for only $1 trillion, vs $6 trillion of long-term debt. Holdings of short-dated Treasuries are heavily concentrated in offshore finance jurisdictions. The majority of these holdings are attributable to hedge funds domiciled in places such as Cayman Islands and other British Overseas Territories (Fichtner 2016).

As for long-dated Treasury holdings, the big story is familiar by now: The share of the two largest foreign creditors of the U.S. government, China and Japan, peaked after the global financial crisis at just above 50% of total foreign holdings, but has since declined at a steady clip and is down, as of 2023, to just above 25%.

Figure 2: Foreign holders of U.S. Treasuries, 1994-2023

Does this mean China and Japan have sold off their holdings of U.S. treasuries? For this, we need to look at nominal amounts. Figure 3 shows foreign-held U.S. treasuries of all maturities, long and short. We can see that the total volume of foreign-held U.S. debt has skyrocketed since 1994, from $500 billion to over $7 trillion. Zooming in on the big-2, it appears that China has indeed shrunk its U.S. treasury portfolio quite significantly, from $1.3 trillion in 2011 to $830 billion today. It’s not quite that easy though: This decline in direct holdings is counteracted by a significant increase, after 2010, of indirect holdings via custodial accounts Belgium. Brad Setser has been documenting this for many years. Japan, meanwhile, has reduced its direct treasury holdings at a slower pace, they currently stand at $1.1 trillion). Regardless of the precise size of China’s custodial Belgian holdings, China and Japan have reversed or slowed their accumulation of Treasuries but remain the largest—by far—foreign creditor to the U.S. government.

Figure 3: Foreign holders of U.S. Treasuries, 1994-2023

There is, of course, an elephant in this room: Total outstanding U.S. government debt held by the public has massively increased in recent years and stands at $28.5 trillion today (intragovernmental holdings add another $6 trillion to the total, see here). Clearly, domestic holders must have absorbed this increased supply. Who are they?

The rise and fall of foreign treasury holdings

To better understand the domestic distribution and the domestic-international divide in the holder structure of U.S. Treasuries, we can turn to the Fed financial accounts.

Figure 4 immediately makes obvious what we miss when looking only a COFER and TIC data: The massive internationalization of U.S. treasury holdings between 1945 and 2008, from virtually zero in 1945 to just below half of the outstanding volume by 2008. Equally astonishingly, this trend has since reversed, and foreign holdings of Treasuries currently stand at about 30% of the total. (Note that this reversal has taken place while debt issuance by the U.S. government has massively increased). In other words, although foreign holdings of U.S. Treasuries have continued to grow in absolute terms (see Figure 3), the relative share of foreigners in the holder structure has been in decline ever since the global financial crisis.

Figure 4: Holders of U.S. federal debt, 1945 - 2024

Post-2008, the slack was picked up by the Fed. Most recently, the Fed, too, has dramatically reduced its holdings. This time, the slack has, seemingly, been picked up by individual investors. However, in financial accounts data, domestic hedge funds tend to be captured by the ‘households’ category. The growth of the ‘household’ holdings may therefore reflect the massive increase in treasury holdings by levered hedge funds betting on Treasuries in the “cash-futures basis trade” (Aldasoro and Doerr 2025).

Weekly data on foreign official holdings

For the latest developments, there is weekly data on securities held in custody for foreign official and international accounts directly at the Fed. The New York Fed “provides U.S. dollar-denominated banking services to foreign official and international institutions in support of Federal Reserve objectives and in recognition of the dollar’s predominant role as an international currency.” This data is displayed in Figure 5.

Figure 5: Foreign official holdings of Treasuries at the Fed

Note that this data includes “inflation compensation on Treasury Inflation-Protected Securities (TIPS), which captures the inflation adjustment to original face value of TIPS over time.” I’m assuming that this is a relatively small part of foreign official holdings at the Fed. In any case, that’s the reason I’m showing this in nominal rather than in constant dollars. In constant dollars, there has been a steep downward trend over the past decade. Even in nominal dollars, foreign official holdings have been declining for the past three years. I haven’t found information on whether or not the sharp but brief drop following Donald Trump’s election victory in November, shown in the second panel, reflected active selling.

References

Aldasoro, Iñaki, and Sebastian Doerr. 2025. “Money Market Funds and Sponsored Repo: An Update.” Rochester, NY. https://papers.ssrn.com/abstract=5188246.

Fichtner, Jan. 2016. “The Anatomy of the Cayman Islands Offshore Financial Center: Anglo-America, Japan, and the Role of Hedge Funds.” Review of International Political Economy 23 (6): 1034–63. https://doi.org/10.1080/09692290.2016.1243143.