Central banks have sold $233 billion of Treasuries since February. Private money did not blink

Foreign holders shed $72 billion of Treasury securities in June, taking total foreign holdings to $9.30 trillion, and effectively all of the selling came from central banks and government entities, which cut $70 billion ^[1][2]. Since February, that official sector has shed $233 billion, dropping to $3.78 trillion, the lowest level since February 2024 ^[3].

The other side of the ledger did not move. Foreign private-sector holdings were essentially unchanged at a record $5.52 trillion ^[4]. The split now runs about 41 percent official and 59 percent private ^[5], which is the actual answer to who is absorbing US debt from abroad: not reserve managers, but funds and corporates.

The composition of that private pile deserves a look before anyone calls it a vote of confidence. According to Wolf Richter, it includes US companies with offshore accounts, such as Apple in Ireland, and US hedge funds domiciled in the Cayman Islands that run the basis trade and park the underlying Treasuries there ^[6]. A meaningful slice of "foreign" demand is American money wearing a different passport, some of it levered.

Japan did the heaviest official selling: $26 billion in June and $123 billion since February ^[7], roughly 53 percent of the entire official-sector decline over that stretch ^[8]. Richter's reading is that this is intervention preparation rather than a verdict on US credit. Japan has propped up the yen repeatedly in recent years, twice this year, most recently in a joint US-Japan intervention at the start of August, and each time it sold dollars and bought yen ^[9]. To raise those dollars, authorities can let Treasuries mature without rolling them, sell outright, or unwind overnight reverse repos at the Fed ^[10]. Richter notes that the large drops in Japan's holdings in 2022, 2024 and 2026 line up ahead of the big interventions, with holdings partly rebuilt afterward ^[11].

Mainland China and Hong Kong combined shed $42 billion in June and $84 billion over 12 months, which Richter describes as a long methodical process ^[12]. That was 60 percent of June's official selling ^[13].

The financial centers tell a different story. Seven of the largest holders are financial hubs - the UK, Cayman Islands, Belgium, Luxembourg, Ireland, Switzerland and Singapore - and their combined holdings dipped only $11 billion in June from May's record, to $3.23 trillion, about 35 percent of all foreign holdings ^[14]. Elsewhere, Canada added $24 billion to reach $460 billion, India added $5 billion, Saudi Arabia $2 billion, South Korea $3 billion, while France, Norway, the UAE and Israel trimmed ^[15][16].

One thing this was not: a valuation artifact. Holdings are marked at market value, so rising long-term yields can shrink them without anyone selling, but Richter says that was not a factor in June ^[17].

What to watch. Whether Japan rebuilds after the August intervention, as it has previously ^[11]. The Fed's foreign official reverse repo balance, $358 billion of dollar cash the Fed owes foreign entities and that they can draw on daily ^[18], is dry powder equal to about 9 percent of official Treasury holdings ^[19]; a drawdown there would substitute for further Treasury sales. And whether financial center holdings, at 35 percent of the foreign total ^[14], keep holding the bid when the basis trade is less profitable.