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A Guide to the Giant Foreign Buyers of U.S. Debt

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Why the Bull Market in Bonds Might Not Be Over Yet

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It’s the biggest pile of debt in the world -- the $14.5 trillion U.S. Treasuries market. It’s been built with the help of foreign central banks and investors, who have clamored to buy U.S. government bonds through good times and bad. But what happens if their appetite wanes? Both China and Japan -- the biggest foreign owners of Treasuries -- have pared their holdings from the record levels of recent years. And with the U.S. looking at bigger budget deficits, not smaller, a drop in demand for its bonds could be particularly ill-timed.

No. Nor has the U.S. ever owed so much. Foreign investors hold $6.35 trillion in U.S. government debt, more than twice as much as in 2008. (The share of debt owned by foreigners fell in that time period, to 44 percent from 56 percent, primarily because the U.S. Federal Reserve was buying so much itself.) China is the largest holder of Treasuries at the moment, followed by Japan, and between them they account for more than $2 trillion of U.S. securities.