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Debt 101: Japan Overtakes China as Largest US Creditor

21st Century Wire says…

Who Owns The Most U.S. Debt?

Mike Patton from Forbes explains, “To satisfy the U.S. government’s need for revenue, Washington collects taxes and fees. What happens if this isn’t enough? What happens if the federal government needs more? That is the subject of this article in which we’ll reveal who owns the most U.S. debt and how much of it is owned by foreign nations. We’ll begin by explaining, in simple terms, how the debt market functions.”

“An individual takes on debt when they finance a new car, house, etc. The U.S. government does so when it issues securities. Specifically, the federal government issues Treasury bills, notes, and bonds. The primary difference is in their maturity. For example, Treasury bills have a maturity less than one year. Treasury notes mature in one to ten years. Treasury bonds have maturities greater than 10 years.”

“To issue its debt, the government holds periodic Treasury auctions. A successful auction indicates a strong demand for U.S. Treasury securities. If the auction doesn’t go well, it means demand for Treasuries is weak. Who owns the most Treasurys?”

It appears that the Japanese have just moved into pole position in terms of US bondholders…

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Japanese become biggest funders of American government for first time since 2008 financial crisis

Wall Street Journal


Japan dethroned China as the top foreign holder of U.S. Treasurys for the first time since the financial crisis, following a wave of purchases by buyers shifting money to the U.S. as Japan’s economic policies push down interest rates there.

In reclaiming its status as the largest foreign creditor to America in U.S. official data, Japan is reasserting itself as Beijing holds its Treasury portfolio steady amid a weakening Chinese economy.

U.S. debt bears higher yields than government bonds offered in other rich nations, thanks to the perception of stronger U.S. growth prospects and to central-bank bond purchases that have driven yields near zero across Europe and in Japan.

Private investors and official institutions in Japan owned $1.2244 trillion of U.S. government securities at the end of February, compared with $1.2386 trillion at the end of January, according to the latest monthly data released by the Treasury on Wednesday…

Continue this story at Wall Street Journal

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