NEW YORK — China, the largest foreign lender to the U.S., cut its holdings of Treasurys in August by the most in at least a decade as the stripping of America’s AAA credit rating by Standard & Poor’s sent yields to record lows.
The world’s second- largest economy cut its position in U.S. government securities by $36.5 billion, or 3.1 percent, to $1.14 trillion, according to Treasury Department data released Monday in Washington. At the same time, the data showed total foreign ownership increased 2 percent to a record $4.57 trillion as global investors sought a refuge from the financial market turmoil that followed the downgrade.
Treasurys beat stocks and commodities in August as the combination of the downgrade to AA+, slowing U.S. growth and Europe’s debt crisis drove investors into the world’s biggest and most-liquid debt market. Treasury data also showed that holdings of Treasurys increased in the United Kingdom and the Caribbean, through which other nations often conduct purchases.
Treasurys returned 2.8 percent in August, while the global bond market gained 1.99 percent. Bloomberg News
