Foreign demand for U.S. Treasuries hit a record high of $9.13 trillion in June, climbing by $1 trillion compared to the same month last year, according to the Treasury Department’s Friday release. This makes it the fourth month in a row where global holdings of U.S. government debt stayed above the $9 trillion level. But while that top-line number screams “demand,” the actual flow of money shows foreign investors are not exactly riding a one-way train into Washington’s debt pit. On a transactional basis, the U.S. suffered a $5 billion outflow in June, right after a huge $147 billion inflow in May, an inflow that hadn’t been seen since August 2022. April wasn’t any better, with a $40.8 billion withdrawal, which came in the middle of economic chaos caused by President Donald Trump’s trade decisions. Japan adds more while China hits the brakes Japan increased its position again in June, locking in $1.147 trillion in U.S. Treasuries , up $12.6 billion from May’s $1.134 trillion. That move made Japan the biggest non-U.S. holder of American government debt… still. Meanwhile, the United Kingdom pushed further into second place, lifting its holdings to $858.1 billion, a modest 0.6% jump from the previous $809.4 billion. The UK first overtook China in March and hasn’t looked back. But the UK’s rising numbers aren’t really about British interest, most of those holdings are custody accounts for hedge funds. Same goes for debt stashed in Cayman Islands and Bahamas, where funds regularly park their positions. China, once the loudest name on the list, barely moved. The world’s second-largest economy kept its U.S. Treasuries holdings around $756.4 billion, just slightly above May’s $756.3 billion. That puts Beijing’s holdings at their lowest level since February 2009, when the global financial system was falling apart. For a country that once held over $1.3 trillion in Treasuries between 2012 and 2016, this is a dramatic pullback. Beijing’s playbook is clear: protect the yuan. Selling off U.S. debt helps China keep its own currency from falling apart under pressure. In a report from China Money, published under the People’s Bank of China, researchers warned, “Although U.S. Treasuries have not yet reached the default threshold, their expansion is unsustainable.” The piece called for a continued reduction in American debt holdings, arguing that U.S. growth alone wouldn’t be enough to balance out its huge deficits and trade gaps. The team also criticized Trump’s trade moves, suggesting that the White House’s obsession with the trade deficit could choke off global demand for the U.S. dollar . They called the entire situation a “tug-of-war” between the country’s economic goals and monetary pressures. India and Hong Kong reduce their exposure, equities rise, yields climb Beyond China, others in Asia are also pulling back. India dropped its U.S. Treasuries to $227.4 billion, while Hong Kong reduced its position to $242.6 billion. Both regions had previously kept steady levels of American debt but have now joined China in scaling down exposure, signaling broader regional caution. Even as some foreign players dumped Treasuries, they weren’t totally fleeing the U.S. market. In June, foreigners poured $163.1 billion into U.S. equities, on top of $115.8 billion from May. Still, total net capital inflow into the U.S. dropped to $77.8 billion in June. That’s a 75% drop from $318.1 billion in May, which was the biggest monthly inflow since September 2024. Bond yields rose on Friday after consumer data offered mixed signals. Retail sales for July climbed 0.5%, hitting expectations. Without counting cars, sales still went up 0.3%, also matching forecasts. The jump suggested that consumers were still spending even as tariffs and tax adjustments rolled through. At the same time, the University of Michigan’s consumer sentiment index dropped to 58.6 in August, down from 61.7 the month before. Inflation fears were blamed for the decline, showing that even if people are spending, they’re not exactly feeling good about it. The bond market reacted fast. The 2-year Treasury yield went up 2 basis points, landing at 3.757%, while the 10-year note added 3 basis points, moving to 4.324%. Sign up to Bybit and start trading with $30,050 in welcome gifts