China Cuts U.S. Treasury Stake to 7%, Squeezing S&P 500 ETF Flows
China’s holdings of U.S. Treasuries plunged to 7% of the market—its lowest since 2008—with holdings falling to $682.6 billion after peaking at 28% 15 years ago. Rising 10-year yields (4.09%) and waning foreign demand nudged the SPDR S&P 500 ETF to a 0.07% gain in the latest session.
1. China’s Treasury Holdings Plunge
China’s share of U.S. Treasuries has shrunk to 7% from a 28% peak 15 years ago, with holdings at $682.6 billion—its lowest level since 2008—as Beijing has directed banks to reduce dollar exposure and boost gold reserves.
2. Rising Yields and De-risking
U.S. 10-year Treasury yields climbed to 4.09%, up 2.89 percentage points over five years and 0.45 points over 15 years, driven by steady issuance of new securities and waning foreign demand amid geopolitical tensions.
3. Impact on SPDR S&P 500 ETF
The SPDR S&P 500 ETF recorded a 0.07% gain in the latest session as equity inflows ticked up, but elevated borrowing costs and a retrenchment in foreign debt purchases have increased pressure on equity valuations, particularly rate-sensitive sectors.