United Kingdom Suddenly Owns Over $500 Billion of US Treasury Securities

Each and every month, the U.S. Department of the Treasury publishes a list of the largest foreign holders of US Treasury securities.

The countries at the top of the list are the countries that you always hear about owning massive piles of US debt - China and Japan. Both countries own more than $875 billion in US Treasuries.

Third on the list is the United Kingdom. According to the Treasury Department, the UK owned $511.8 billion in US Treasuries as of November 2010.

The fact that the UK is number three is not very surprising. However, the amount of US debt that the United Kingdom has snapped up over the past year should certainly raise some eyebrows. Let's look at the trend over the past 12 months:

Nov '09 - $155.5 billion
Dec '09 - $180.3 billion
Jan '10 - $208.3 billion
Feb '10 - $233.5 billion
Mar '10 - $279.0 billion
Apr '10 - $321.1 billion
May '10 - $350.9 billion
Jun '10 - $363.7 billion
Jul '10 - $376.5 billion
Aug '10 - $450.3 billion
Sep '10 - $459.8 billion
Oct '10 - $478.5 billion
Nov '10 - $511.8 billion

The numbers are just staggering - in just 12 months, the United Kingdom has increased its holdings of US Treasury securities by roughly $355 billion, more than tripling its position.

China, on the other hand, has pared down its position over the past 12 months from $929 billion to $895.6 billion.

So, the UK adds $355 billion over the course of one year, while China reduces their holdings by $30 billion? What gives?

--

According to the New York Times, China may actually be behind the dramatic rise in US Treasury securities purchases by the UK over the past 12 months.

The New York Times says:

"It is not easy to see how the Chinese government managed to keep its currency from rising more rapidly against the dollar if it did not continue buying Treasuries in 2010, and there has been speculation that it shifted purchases to accounts managed by British money managers.."

"..if so, such purchases would show up as British purchases.."

"If China has been buying through money managers, it may be easier at some point for it to begin selling Treasuries through the British channel without others understanding where the selling pressure is coming from."

While this is just speculation at this point, it would certainly explain why the United Kingdom has dramatically ramped up their purchases of US debt over the past year.

Source: Treasury.gov - Major Foreign Holders of Treasury Securities

Filed under: General Knowledge