The Whole Story About China Being The Biggest Foreign Owner Of US Debt Is On The Verge Of Going Away
By MATTHEW BOESLER of Business Insider
For years, China has been the largest foreign holder of U.S. government debt.
According to the latest data available, China's portfolio of U.S. Treasuries totaled $1.305 trillion at the end of October, just shy of the $1.315 trillion peak value registered in July 2011.
However, China's position as America's largest creditor could be eclipsed in 2014, according to George Goncalves, head of fixed income strategy at Nomura.
In his year-ahead outlook, Goncalves advises clients to consider such a "tail risk" scenario.
"As Japan’s [quantitative and qualitative easing] worked its way to foreign bonds with a 1-year lag, Japanese investors could be forced to seek higher yields overseas," writes Goncalves. "In our opinion, Japan’s foreign bond buying may just enable it overtake China as the top foreign holder of USTs, especially if/when China continues to diversify its holdings away."
