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China’s US Treasuries holdings fell in March for first time in four months

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China’s holdings of Treasuries fell in March for the first time in four months, dropping by $10.4 billion from February to $1.12 trillion, the lowest level in near two years, according to US Treasury Department.

China remained the top foreign holder of US sovereign debt, ahead of Japan.

The data preceded the recent deepening of the trade war, which has prompted renewed speculation that Beijing could sell American assets to put pressure on Washington.

Since last week after a dismal 10-year Treasury auction, there has been renewed speculation whether China may sell its US debt in retaliation for increased tariffs on $200 billion of its exports to the United States.

The latest data on China’s US bond holding were collected before a sudden breakdown in trade talks between the world’s two biggest economic powers 1-1/2 weeks ago and prior to the US tariff hike on Chinese goods, which went into effect last Friday.

“The decline this month brings China essentially flat to where they were in February, erasing the increases from December through February,” Jefferies LLC’s senior money market economist Tom Simons wrote in a research note.

Meanwhile, foreigners resumed sales of Treasuries in March as U.S. 10-year yields fell to 15-month lows after the Federal Reserve signaled it would not raise interest rates in 2019, according to the latest Treasury data.

They sold $12.53 billion in U.S. government debt in March after buying $19.91 billion the month before.

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