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Foreign held U.S. debt reaches all-time high

By Catholic Online (NEWS CONSORTIUM)
June 17th, 2012
Catholic Online (www.catholic.org)

China, the largest buyer of United States Treasury debt, increased its holdings after trimming them for two straight months, sending foreign demand for U.S. Treasury securities to a record high for the month of April.

LOS ANGELES, CA (Catholic Online) - The Treasury Department has declared that total foreign holdings rose 0.4 percent to $5.16 trillion, the fourth consecutive monthly increase. Investment worry about Europe's deepening debt crisis has led to the increase demand for U.S. debt, as it is by far considered one of the safest investments.

China boosted its holdings 0.1 percent to $1.15 trillion in April, following a one percent drop in March and a 0.9 percent decline in February. March's figures were revised down from the government's initial estimate a month ago that previously reported that China had boosted its holdings in March.

The second-largest buyer of U.S. Treasury debt, Japan trimmed its holdings 0.9 percent to $1.07 trillion. The third-largest buyer of Treasury debt, Brazil boosted its holdings 5.3 percent to $246.7 billion.

Britain increased its holdings 26.5 percent to $154.2 billion while France increased its holdings by 29.4 percent to $59.4 billion. The largest economy in Europe, Germany, increased its holdings of Treasury securities 1.5 percent to $65.6 billion.

Demand for Treasury securities has remained strong despite the first-ever downgrade of the government's debt last August. Standard & Poor's lowered its rating on long-term Treasury debt one notch from AAA to AA+ after a lengthy debate in Congress over increasing the nation's borrowing limit.

S&P reaffirmed that rating last week and said it was keeping a negative outlook on the rating for the future. S&P pointed out that U.S. political leaders were not addressing the federal debt burden, and the rating agency predicted that the government's debt, as a percent of the economy, would rise from 77 percent in 2011 to 83 percent this year and 87 percent by 2016.

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