Forget China, Federal Reserve Is Biggest Seller Of US Debt—By $1.5 Trillion, Even As Foreign Holdings Remain Stable - SPDR S&P 500 (ARCA:SPY)

Core Insights - The Federal Reserve has significantly reduced its holdings of U.S. Treasuries by $1.5 trillion since May 31, 2022, outpacing the actions of other nations [1][2][4] - This reduction is part of the Fed's quantitative tightening (QT) policy aimed at shrinking its balance sheet and combating inflation [2][4] - Major foreign creditors, including Japan, China, Germany, and Canada, have maintained stable or only slightly fluctuating Treasury holdings during this period [3][4] Federal Reserve Actions - The Fed's aggressive selling has raised concerns about the long-term stability of the Treasury market, as it has reduced its holdings more than any other country or institution [4][5] - Analysts suggest that the current trend of the Fed's selling is unsustainable, creating a structural demand gap as government funding needs grow [4][5] Economic Implications - There is speculation that the U.S. may be moving towards a framework of "full financial repression," where the government would implement measures to channel funds to itself [6] - Ending quantitative tightening is seen as necessary, but it does not fundamentally address the structural demand for Treasuries [6]