Core Insights - Foreign investors significantly increased their holdings of U.S. Treasury securities in May, particularly from Canada, indicating resilient demand despite market concerns over the Trump administration's policies [1] - The total amount of U.S. Treasuries held by foreign investors reached $9.05 trillion in May, an increase of $32.4 billion from April, nearly offsetting the previous month's decline [1] - The TIC data reflects the demand for U.S. Treasuries amid ongoing trade tensions and tariff implementations, with over 30% of U.S. debt held by foreign entities [1] Summary by Category Foreign Holdings - Japan's holdings of U.S. Treasuries increased by $0.5 billion to $1.135 trillion, marking the fifth consecutive month of growth [2] - The United Kingdom's holdings rose by $1.7 billion to $809.4 billion in May [3] - Mainland China's holdings decreased by $0.9 billion to $756.3 billion, continuing a trend of holding below $1 trillion since April 2022 [4] - Canada emerged as a major buyer, increasing its holdings by $61.7 billion to a record high of $430.1 billion [4] Market Dynamics - The TIC data indicates that foreign investors net purchased $318.5 billion in long-term U.S. securities in May, with private foreign investors contributing $287.5 billion [6] - U.S. residents reduced their net purchases of foreign long-term securities by $59.1 billion in May [6] - The overall net inflow of foreign capital into the U.S. in May was $311.1 billion, with private foreign inflows at $333.2 billion and official outflows at $22.1 billion [6]

Core Viewpoint - The U.S. Treasury Department's TIC report indicates a significant increase in foreign purchases of U.S. Treasury securities in March, reaching a total of $9.05 trillion, marking a $233.1 billion increase, amidst market volatility prior to tariff announcements by Trump [1] Group 1: Foreign Holdings of U.S. Treasury Securities - Japan's holdings of U.S. Treasuries increased by $4.9 billion in March, totaling $1.1308 trillion, maintaining its position as the largest foreign holder since surpassing China in June 2019 [2] - Mainland China's holdings decreased by $18.9 billion to $765.4 billion, marking a continued decline since April 2022, and resulting in China becoming the third-largest holder behind the UK [5] - The UK increased its holdings by $29 billion to $779.3 billion, surpassing China for the first time in over two decades [5] Group 2: Market Reactions and Trends - The TIC data reflects foreign investors' demand for U.S. Treasuries prior to Trump's tariff announcements, with significant market reactions observed in April, including a notable sell-off in the $29 trillion U.S. Treasury market [1] - The Bloomberg Dollar Spot Index fell by 1.8% in March and nearly 4% in April, while the yield on 10-year U.S. Treasuries rose from 3.86% to 4.59% during the same period [1] - The overall net inflow of foreign capital into U.S. securities in March was $254.3 billion, with private foreign investment accounting for $259.2 billion of this total [7] Group 3: Other Notable Changes - The Cayman Islands saw an increase in U.S. Treasury holdings by $37.5 billion to $45.53 billion, attributed to hedge funds and leveraged investors [6] - Canada’s holdings rose by $20.1 billion to $42.62 billion, indicating a broader trend of increasing foreign investment in U.S. Treasuries [6] - Foreign residents increased their holdings of short-term U.S. Treasury bills by $98.3 billion, reflecting a growing interest in short-term securities [8]