The multi-month decline in China’s official US Treasury holdings may not represent active selling by Beijing, according to Fortune, the Globe and Mail and the South China Morning Post on October 18. Some of the holdings may have been relocated through custodial and intermediary accounts in Canada and Belgium, allowing exposure to Treasuries to be maintained while reducing the visibility of official holdings. Market participants note that Canada may, on a statistical basis, displace China as one of the top three holders of US government debt. If confirmed, the picture would materially shift the narrative around Treasury demand structure, the trajectory of US–China financial relations and the medium-term rebalancing of global foreign-exchange reserves.

What We Know

On October 18, Fortune, the Globe and Mail and the South China Morning Post — citing the Treasury International Capital (TIC) data recently published by the US Treasury and publicly available broker and custodian position changes — offered a fresh interpretation of the persistent decline in China’s official Treasury holdings. Their reporting notes that China’s official holdings have fallen for several months in a row, while TIC data has simultaneously shown Treasury holdings in countries such as Canada and Belgium rising in mirror-image fashion, a pattern that has recurred repeatedly over the past two quarters.

Several market participants suggest this does not mean that the People’s Bank of China is rapidly selling Treasuries. Instead, the data may reflect a relocation of holdings among intermediary accounts. By routing part of its Treasury exposure through custodial and agency accounts domiciled in Canada and Belgium, China’s official sector can preserve its price exposure to US government debt while reducing the visibility of official holdings — a buffer against potential spillovers from geopolitical frictions, sanctions risk and sentiment swings.

The reports also note that if this relocation logic holds, Canada could on a statistical basis displace China as one of the top three holders of US government debt. Canada’s reported holdings have risen sharply in the latest TIC release, with an increase that closely matches the pace and timing of the decline in China’s official holdings — a convergence repeatedly highlighted by independent analyses.

The reports also cite analyst estimates that China’s August holdings fell to their lowest level in roughly 18 years. That milestone is best understood against the broader backdrop of gradual reserve diversification, the steady internationalisation of the renminbi and the rising appetite for hedges against systemic dollar-asset risk.

Wider Perspective

1. A stealthy rebalancing of Treasury demand structure

The mirror-image pattern between falling Chinese official holdings and rising Canadian and Belgian holdings points to a stealthy rebalancing of Treasury demand structure. Custodial and intermediary accounts are taking on a larger role in cross-border Treasury operations, suggesting that traditional country-level statistics may no longer be the best window into sovereign behaviour. Investors will increasingly need to follow second-tier custodian data and broker-level position changes.

2. A de-sensitisation pathway for US–China financial ties

The use of intermediary accounts to relocate Treasury holdings reflects a heightened sensitivity among sovereign actors to the visibility of their own positions during periods of geopolitical tension. The practice could become normalised in US–China financial interactions, pushing the bilateral relationship toward more resilient modes of engagement while raising the bar for regulatory communication and risk-management frameworks on both sides.

3. The implicit path of global reserve diversification

The decline in China’s official Treasury holdings sits against a wider backdrop: the gradual internationalisation of the renminbi, the diversification of reserve allocations into eurozone and Japanese government bonds and the simultaneous rise in demand for gold and other safe-haven assets. Intermediary-led relocation of Treasury positions is one operational tool within that broader reserve-rebalancing strategy and illustrates the coordination between policy intent and market execution.

4. Stress tests for Treasury market resilience and price discovery

If the visibility of official demand falls because of intermediary-account reshuffling, Treasury price discovery could face periodic stress. Investor uncertainty about the strength of official demand may translate into higher term premia and volatility, a structural risk for the global financial system that anchors risk-free pricing off Treasuries. Maintaining data transparency will require joint effort from regulators, market intermediaries and investors.

Viewpoints Compared

• PBOC and Chinese official channels: No formal response to the reporting. Market observers note that recent official messaging on diversifying the reserve portfolio is consistent in direction with the relocation pattern described in the reports.
• US Treasury and financial regulators: The TIC data is published and transparent. Differences across country-level statistics can be explained by custodial structure, valuation methods and reporting conventions, and any reading of the data should triangulate second-tier data and market-microstructure evidence rather than over-extrapolate.
• Major brokers and custodians: Canada and Belgium are major global custody and clearing centres and have absorbed notable cross-border position-rebalancing flows over the past two years — a pattern that in itself demonstrates the diversification and resilience of the global financial infrastructure.
• International institutional investors and asset managers: Are reassessing their trust in official holdings data, and some have begun incorporating second-tier data into their investment processes in order to better understand the supply-demand structure of the Treasury market and the locations of potential price inflection points.

Editor: GoodInfo Global News Team

Core Summary

According to multiple financial outlets, the US 10-year Treasury yield climbed this week to its highest level in roughly 19 years. The move reflects both a repricing of inflation and fiscal-deficit expectations, and has prompted some long-term investors to begin viewing current levels as a potential opportunity to add long-duration bond exposure.

Event Details

Coverage indicates the move higher in the 10-year yield is being shaped by a stack of factors: stickier-than-expected inflation, a pullback in market expectations of near-term Fed rate cuts, and persistent concerns over long-term bond supply and fiscal sustainability. Bond traders note that some pension funds, insurance portfolios, and global central-bank reserve allocators have begun evaluating strategies to lengthen duration at current yield levels.

Big Picture

A 10-year yield not seen since 2007 implies a significantly higher “coupon value” for the US risk-free asset. At the same time, persistently elevated long-end rates mean higher costs for mortgages, corporate funding, and state and local government debt, which could weigh on the real economy over the medium term. The market is searching for a new balance between “coupon opportunity” and “macro risk.”

Edited by GoodInfo Global News Desk