US Treasuries Favored in January! Three Major Overseas "Creditors" Take Action, US Stocks Face Capital Flight

Question AI · Japan’s record increase in U.S. debt holdings—what are the underlying economic considerations?

In January, the scale of foreign holdings of U.S. debt rebounded.

The latest data released by the U.S. Treasury shows that Japan, the United Kingdom, and Mainland China, the top three overseas “creditors,” simultaneously increased their U.S. debt holdings by over $10 billion in January, while Canadian holdings declined significantly.

Overall foreign holdings of U.S. debt ended the previous downward trend.

Japan’s significant increase, Canada’s reduction

Data shows that the total foreign holdings of U.S. debt in January rose to $9.3058 trillion, up from $9.2710 trillion in the previous month.

Compared to the same period last year, foreign investors held approximately 8% more U.S. Treasury bonds in January 2026.

Among the top ten countries and regions holding U.S. debt, seven increased their holdings in January, while three decreased, indicating a divergence in major holdings.

Japan remains the largest overseas holder of U.S. Treasury bonds.

In January, Japan’s holdings increased to $1.2253 trillion, a monthly increase of $39.8 billion, reaching a new high since July 2022.

The United Kingdom ranked second, with holdings increasing by $29.3 billion in January, totaling $895.3 billion.

Mainland China increased its holdings by $10.9 billion in January, bringing its total to $694.4 billion, remaining the third-largest holder globally. However, since early 2025, its overall holdings have decreased by 9%.

Canada’s reduction was the most significant, with holdings dropping sharply by $72.4 billion in the month, to $395.8 billion, making it the largest decrease among the top ten holders.

EU countries’ U.S. debt holdings increased by $8 billion, reaching $2.13 trillion.

In January this year, former President Trump pressured Denmark over Greenland, and Danish pension funds warned of exiting their U.S. debt positions.

In the same month, U.S. Treasury Secretary Janet Yellen dismissed speculation about Europe potentially selling U.S. debt.

Abandoning U.S. stocks, shifting to U.S. bonds?

In January, global investors showed a clear “sell stocks, buy bonds” trend.

Data indicates that in that month, there was a net withdrawal of $8.3 billion from the U.S. stock market, while a net inflow of $49.9 billion into the U.S. bond market.

In January, net purchases of long-term securities, short-term securities, and bank funds by foreign investors totaled $25 billion, with a net capital outflow.

Specifically, foreign private net outflows amounted to $76.1 billion, while foreign official net inflows reached $51.1 billion.

Foreign residents increased their holdings of U.S. long-term securities, with net purchases of $63.5 billion. Among these, foreign private investors bought $42 billion, and foreign official institutions bought $21.4 billion.

U.S. residents increased their holdings of foreign long-term securities, with net purchases of $47.9 billion.

Including adjustments (such as foreign investment portfolio acquisitions of U.S. stocks estimated through stock swaps), the total foreign net purchase of long-term securities in January is estimated at $15.5 billion.

Foreign investors reduced their holdings of U.S. Treasury bills (short-term debt) by $10.2 billion. Meanwhile, all dollar-denominated short-term securities and other custodial liabilities held by foreigners increased by $17.8 billion.

Banks’ net dollar liabilities to foreign investors decreased by $58.3 billion.