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China, Japan and other major holders cut US Treasury holdings amid Iran US war, pushing yields to 15 month highs and dimming Fed rate cut hopes
Rising Yields And War Fears Shake US Treasury Market
US Treasury bills are under pressure as Chinese investors shed their holdings along with overseas institutions and central banks amid the geopolitical turmoil triggered by the Iran-US war.
Experts underline the growing concerns of inflation, energy prices and fiscal pressure as a major factor behind the reductions in Treasury holdings.
Seven of the top 10 foreign holders of US Treasuries — including Japan, Belgium, Canada, and France — reduced their holdings of US government debt during the month.
The West Asia crisis has put pressure on the US Treasury market with yields going up, dashing hopes for further rate cuts by the Fed in the coming meetings.
According to a report by the South China Morning Post citing data released by the US Treasury Department on Monday, China offloaded US Treasuries worth $41 billion. Its holding now stood at $652.3 billion from $652.3 billion a month earlier.
China, however, still remains the third-largest foreign holder after Japan. The latter cut down US Treasury holding by $47.7 billion in March to $1.192 trillion.
Bond Market In Turmoil Amid Iran-US War
The bond market is facing pressure amid the rising fears and doubts after the geopolitical turmoil following the Iran-US war, with yields touching to the record high.
A higher treasury yield suggests that investors fear that inflation may soon come, which eventually unlikely scenario of rate cuts.
The 10-year US Treasury – the key benchmark for US government borrowing – is hovering at its highest level in 15 months. The yield currently stands at 4.611 per cent, while for the 30-year treasury, it stands at 5.14 per cent.
India Trims Its US Debt Holding Too
India’s holdings of US Treasuries also declined in March, falling to US$183 billion from US$190.6 billion in February. The data showed India’s exposure to US government securities has been gradually easing from US$239.9 billion in March 2025. Despite the decline, India remained among the top 15 foreign holders of US Treasury securities globally.
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