Foreign investors cut Treasury bills by $29 billion in June as Washington courts stablecoin issuers
This digest was compiled by AI from multiple sources — links to the originals are below.
Foreign investors sold a net $29 billion of short-term US Treasury bills in June, according to Treasury International Capital data. The sales came even as total foreign inflows into US financial markets reached $133.5 billion, driven by $181.4 billion in equity purchases. Washington is looking to stablecoin issuers such as Tether and Circle as a potential offsetting source of demand for government debt.
Key Facts
- Foreign investors sold a net $29 billion of short-term Treasury bills in June, following $43.5 billion in May, for a two-month total of $72.5 billion.
- Foreign holdings of short-term Treasuries fell from about $1.430 trillion in May to $1.400 trillion in June.
- Foreign investors bought $181.4 billion of US equities in June but only $6.8 billion of long-term Treasury notes and bonds.
- Total net foreign inflows into US securities and banking assets were $133.5 billion in June.
- Stablecoin issuers Tether and Circle hold much of their reserves in Treasury bills and related assets.
Treasury Bill Outflows
Foreign investors reduced their holdings of short-term US Treasury bills by $29 billion in June, according to the Treasury International Capital report. The June sale followed a $43.5 billion reduction in May, bringing the two-month total to approximately $72.5 billion. Foreign holdings of Treasury bills fell from about $1.430 trillion in May to $1.400 trillion in June, a decline of roughly 2%. The TIC data do not identify the reasons behind the sales, but the pattern shows weaker foreign demand for the shortest-maturity US government debt.
Equity Inflows and Debt Demand
Foreign investors purchased $181.4 billion of US equities in June, accounting for most of the $207.1 billion in long-term US securities bought during the month. In contrast, foreign buyers acquired only $6.8 billion of long-term Treasury notes and bonds. Total net foreign inflows into US securities and banking assets reached $133.5 billion in June, with $34.4 billion moving out through bank balance-sheet flows. The data indicate that foreign investors favored US equities over government debt, particularly at the short end of the yield curve.
Stablecoin Issuers as Debt Buyers
Washington is looking to stablecoin issuers as a potential source of demand for Treasury bills as foreign buyers reduce their holdings. Issuers such as Tether and Circle keep much of the money backing their tokens in Treasury bills and closely related assets. If foreign investors continue to cut bill holdings, a larger stablecoin market could provide another, potentially equally large source of demand. June's data show that the stablecoin sector already has significant scale, while recent token issuance was far too small to explain the $29 billion sale.
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Foreign investors cut Treasury bills by $29 billion in June as Washington courts stablecoin issuers
