While much attention is often given to foreign ownership of U.S. debt, new analysis reveals that the Federal Reserve has been the most significant seller of U.S. Treasuries over the last three years.
The central bank has reduced its holdings by a staggering $1.5 trillion since May 31, 2022, a move that dwarfs the combined actions of all other nations.
Fed’s Treasury Portfolio Shrinks By $1.5 Trillion
This dramatic reduction is the result of the Fed’s quantitative tightening (QT) policy, an effort to shrink its balance sheet and combat inflation.
A chart compiled by Otavio Costa of Crescat Capital LLC, using data from the Federal Reserve, starkly illustrates this trend.
The Fed’s portfolio is shown in a steep decline. At the same time, the holdings of major foreign creditors—including Japan, China, Germany, and Canada—have remained comparatively stable or shown only minor fluctuations over the same period.
