China lost its status of top foreign holder of US Treasury securities in June for the first time in around two years, US Treasury Department data released on Thursday shows. Japan is now the top holder of US debt.

Japan added $21.9 billion to its stockpile of US Treasury Bills, bringing its holdings to a total of $1.122 trillion, the highest level in more than two and a half years. Despite increasing its holdings by $2.3 billion in June to $1.112 trillion, China slipped to second place for the first time since June 2017.

Tokyo held the position of America’s largest foreign creditor from January to May 2017.

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“The generally low- and negative-yielding sovereign debt market makes Treasuries comparatively more attractive than European and Japanese debt,” Benjamin Jeffery, rates strategist at BMO Capital Markets in New York, said as cited by Nikkei. He also told Bloomberg that the interest from Japanese investors signals “the globally low and negative yield environment.”

Russia keeps dumping US debt

Meanwhile, Russia, which has been actively liquidating US Treasury Bills since 2018, continued cropping its stockpile in June to $10.8 billion. Russia was once one of the top investors in US debt, and held $175 billion in 2010.

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Commenting on the reduction in Russia’s holdings of US Treasuries, the Central Bank of Russia said that the measure is aimed at diversifying the nation’s reserves.

“Making a decision on investment of funds, we assess all the risks, including financial, economic and geopolitical,” the head of the Central Bank of Russia, Elvira Nabiullina, stated in June.

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