WASHINGTON — A record drop in foreign holdings of U.S. Treasury bills in December sent a reminder that the government might have to pay higher interest rates on its debt to continue to attract investors.
China reduced its stake and lost the position it had held for more than a year as the largest foreign holder of Treasury debt. Japan retook the top spot as it boosted its holdings.
The Treasury Department said foreign holdings of U.S. Treasury bills fell by a record $53 billion in December.
Private analysts were split over the significance of the decline. Some doubted that the drop in foreign holdings of short-term Treasurys signified growing unease about holding U.S. debt. But other economists saw the decline as a warning signal. They fear that foreigners, especially the Chinese, have begun to worry about record-high U.S. budget deficits and are looking to diversify their holdings. The Associated Press
