China and Japan cut their holdings of U.S. debt

According to figures from the U.S. Treasury Department, the Chinese and Japanese governments successively reduced their holdings of U.S. debt in May. Japan's holdings have been reduced to the lowest level since January 2020, and China's holdings have been reduced to the lowest level since May 2010. China's holdings of U.S. Treasuries totaled $980.8 billion in May from $1,003 billion in April, down 2.2 percent from a month earlier. In May, China reduced its holdings of U.S. debt for the sixth consecutive month. However, thanks to the strong dollar, the net inflow of overseas funds to buy U.S. bonds in May was $99.84 billion, the largest since March 2021. As for U.S. stocks, there continued to be a net outflow of funds from overseas investors in May, with a net outflow of US$9.15 billion, the fifth consecutive month of net outflow. I believe this explains to some extent the weakness of the S&P 500 since the beginning of the year.