WASHINGTON — China reduced its holdings of U.S. Treasury debt for a second straight month in June while the holdings of Japan and Britain rose.
China’s holdings fell by $24 billion to $843.7 billion, a decline of 2.7 percent, the Treasury Department said Monday in a monthly report on debt holdings.
Total foreign holdings of Treasury securities rose $45.6 billion to a total of $4 trillion, an increase of 1.2 percent.
The debt figures are being closely watched at a time when the U.S. government is running up record annual deficits. A drop in foreign demand would lead to higher interest rates in the United States. The yield on Treasurys rises when fewer people invest in them.
It would start with the U.S. government paying more interest on its $13.3 trillion national debt and then ripple through the economy. Consumer loans such as home mortgages and auto loans track the yields on Treasurys, so they could rise too.
So far, interest rates in the United States have remained extremely low. A weak economy has depressed borrowing by the private sector, and the Federal Reserve has kept a key interest rate at a record-low zero to 0.25 percent in an effort to spur stronger growth.
