**China Reduces US Treasury Holdings as UK Takes Second Spot**

Recent data from the US Treasury Department reveals a significant shift in global holdings of US Treasuries. Between February and March, China offloaded $18.9 billion worth of US Treasuries. This marks a notable move as most other countries increased their holdings during the same period.

The United Kingdom has now surpassed China, becoming the second-largest foreign holder of US Treasuries. This is a historical shift, as China has consistently been a top holder for years. As of March, Japan remains the largest holder of US Treasuries, though its holdings have slightly decreased from $1.16 trillion a year ago to $1.13 trillion.

Overall, foreign holdings of US Treasuries surged to an all-time high of $9.05 trillion in March. Noteworthy contributors to this rise include the UK, the Cayman Islands, and Canada, which collectively accounted for $86 billion of the $133 billion increase in foreign UST holdings. The Cayman Islands, with a population of approximately 73,000, is now the fourth-largest foreign creditor, holding $455 billion in US Treasuries.

Macro investor Luke Gromen has raised concerns about the implications of these shifts. He warns that countries increasing their US Treasury purchases may not have the capacity to simultaneously buy more American-manufactured goods. This dynamic could exacerbate the US trade deficit, an ongoing issue that was spotlighted during President Trump’s administration.

Analysts have pointed out that Chinese holdings of US Treasuries have been on a downward trend since 2018. Despite this, the overall foreign ownership of Treasuries continues to grow, hitting unprecedented levels. According to Gromen, the sustainability of this trend remains in question, particularly as it pertains to balancing treasury investments with trade purchases.

These developments highlight significant changes in the international financial landscape and raise questions about future economic relations and trade dynamics.