LONDON (Financial Times) - China has reclaimed its position as America’s biggest creditor, displacing Japan as the top holder of U.S. Treasuries according to fresh data from the U.S. government.
Investors have been closely scrutinizing China’s ownership of Treasuries after the country spent a portion of its foreign exchange reserves last year to defend the renminbi, and in October it ceded its status as the largest foreign holder of Treasuries to Japan.
Since then, however, the Chinese currency has stabilized and so far in 2017 has strengthened from Rmb6.9450 at the start of the year to Rmb6.6855 on Tuesday.
 China bought $44.3bn of Treasuries in June, its biggest haul since June 2011 and the fifth straight month of increases, taking its total holdings to $1.147tn. Japan sold $20.5bn, taking its total holdings to $1.091tn.
"It’s certainly a big deal,” said David Ader, chief macro strategist at Informa Globalmarkets. "After concern about China selling they are clearly back in and buying.” Despite the recent increases to its holdings, they remain $94bn below levels seen at this time last year.
Belgium’s holdings fell slightly, dipping $400m in June. "This is significant because it is widely speculated that China executes trades with Treasuries held in custody in Belgium,” said Thomas Simons, senior money market economist at Jefferies.
But the sales were insignificant when set against China’s direct buying. Mr Ader said: "This is not merely a switch from one seller to another.” The buying and selling of foreign central banks and investors can have a big impact on the U.S. government bond market. The yield on the benchmark 10-year Treasury hit a peak for the year of 2.63 per cent in March and a low of 2.13 per cent in June, trading within a narrow range for the rest of the year, ending Tuesday at 2.27 per cent. Japan became the biggest creditor to the US in October despite its holdings of U.S. Treasuries gradually falling.