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Foreign ownership of US debt falls for 1st time in 6 months

June 15, 2016

WASHINGTON (AP) — Foreign holdings of U.S. Treasury securities slipped for the first time in six months, led by declines in Ireland and the Cayman Islands, the third and fourth largest owners of U.S. debt.

The Treasury Department says total foreign holdings declined 0.7 percent to $6.24 trillion.

The Cayman Islands, a Caribbean banking center, reduced its holdings 2.5 percent to $258.5 billion, while Ireland cut back 2.4 percent to $257.9 billion.

China, the largest overseas owner of U.S. debt, also reduced its holdings by a slight 0.1 percent, to $1.24 trillion. Japan, the second largest, raised its ownership 0.5 percent to $1.14 trillion.

The national debt is more than $19 trillion and projected to grow. That means the United States will need to see continued strong foreign demand for Treasury debt.

Of that amount, $13.7 trillion is publicly traded on financial markets and $5.3 trillion is debt that the government owes itself in the form of holdings in trust funds such as the Social Security trust fund.

Foreigners own about two-fifths of the debt that is publicly traded. Of that amount, $4.1 trillion is held by foreign governments, primarily central banks, who see Treasury securities as one of the world’s safest investments.

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