Foreign governments pulled back their purchases of longer-term U.S. debt as trade tensions escalated around the world.
The declines are relatively small so far for notes and bonds — just shy of $5 billion each for March and April, the most recent months for which Treasury data are available — but it signals a potentially troubling trend.
"We need all the help we can get in the search for buyers of US Treasuries due to the enormous supply coming our way in the next few years," Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note. "Our stance on trade with our trading partners could very well play into this in coming months and quarters, especially with China, the largest owner of US Treasuries."
President Donald Trump's administration has been in a tit-for-tat battle of tariff threats with multiple U.S. trading partners, particularly China.
In addition, Trump has threatened to pull out of multinational trade agreements like NAFTA, and has slapped tariffs on imported steel and aluminum.
One of the most glaring declines has come from Russia, which sliced its holdings of U.S. debt nearly in half from March to April, from $96.1 billion to $48.7 billion. Russia's Treasury ownership peaked at $108.7 billion in May 2017.
In all, foreigners held $6.17 trillion of the total $14.84 trillion of Treasury debt outstanding through April. The national debt including intragovernmental holdings has swelled to more than $21 trillion.