Data issued by the US Treasury Department, on Friday evening, showed that foreign holdings of US Treasury bonds recorded a slight increase in August after a two-month decline, driven by an increase in British and Canadian holdings.
US Treasury bond holdings rose to $9.331 trillion in August from $9.248 trillion the previous month. It recorded an unprecedented level of $9.487 trillion in February of this year. Foreign holdings of Treasury bonds increased by less than one percent year-on-year in August.
The data reported that Japan's holdings fell to $1.068 trillion in August, a 3.2 percent decline from $1.103 trillion in July, recording a decline for the fourth month in a row. However, Japan remained the largest foreign holder of US Treasury bonds, with its holdings peaking at $1.325 trillion in November 2021.
Britain's holdings, the second largest foreign holder of US Treasury bonds, exceeded $1 trillion for the first time. Its holdings increased 1.1 percent to $1.009 trillion in August from $998.3 billion the previous month. Britain is widely seen as a major hub for holding assets for global investors, and its flows are often considered an indicator of hedge fund capital.
As for China, the second largest economy in the world, its holdings of Treasury bonds fell 2.4 percent to $590.7 billion in August from $618 billion in July, declining for the third month in a row. China's holdings in August were the lowest since August 2008, when they reached $573.7 billion.
China remains the third-largest foreign holder of US Treasury bonds, and its holdings in August fell by about 16 percent from their levels a year ago.
Canada, the fifth-largest holder of Treasury bonds, raised its holdings to $490.5 billion, an increase of 4.2 percent from the previous month.
On a transaction basis, August saw significant inflows into Treasuries of $108.9 billion, compared to outflows of $3.6 billion in July.
US corporate bonds recorded inflows of $41.6 billion in August, compared to inflows of $26.9 billion in July.
Inflows into US stocks jumped to $153.9 billion in August, from inflows of $3.7 billion in the previous month.
Total net capital inflows in August rose to $199.8 billion from $87.4 billion in July.
US President Donald Trump issued an exemption from major sanctions and customs duties linked to Russia days before they take effect under a law he signed last month, including duties on the country's goods and sanctions on purchasing oil and gas from it.
Trump said in an executive order issued by the White House on Friday evening that the exemption serves the national interests of the United States.
The law aims to increase pressure on Russia over its war with Ukraine, which began in 2022. But Trump has shown rapprochement with Russia and publicly criticized Ukrainian President Volodymyr Zelensky, including hinting that Kiev needs a new leader.
Weeks before the US midterm elections, in which Trump's Republican Party is waging a battle to maintain its narrow majority in both chambers of Congress, analysts said that the new measures could have increased already high oil prices, at a time when Americans are currently facing rising costs that are largely attributed to the US-Israeli war on Iran.
The late Republican Senator Lindsey Graham was the most prominent supporter of the legislation in Congress, which would have imposed tariffs of up to 100 percent within 30 days on all goods entering the United States from the five largest countries importing crude oil or gas from Russia, as well as on any country that knowingly purchases oil or gas 30 days after the law was passed or is among the five largest countries that help Russia circumvent sanctions.
The order indicated that the exemption will remain in effect until Trump or senior officials in his administration decide to “take appropriate additional action.”
Trump signed the Lindsey-Graham Russia-Iran Sanction Act of 2026 in mid-September.
“I have provided Congress with certification that issuing such an exemption at this time serves the national interests of the United States,” Trump said in the executive order.
Countries such as China and India, two of the largest buyers of Russian oil, expressed concern about the draft sanctions law against Russia.
Beijing said it "consistently opposes cross-border jurisdiction that lacks a basis in international law," while India warned Washington that new tariffs could affect bilateral relations.
The law allows the president to issue a waiver of sanctions once he informs Congress that he has concluded that they do not serve the national interest.
US Representative Don Beyer, a Democrat from Virginia, criticized Trump for the exemption, saying he was bowing to Russian President Vladimir Putin.
“Trump’s recent capitulation to Putin once again betrays our Ukrainian partners and clearly defies the intent of Congress with legislation designed to punish Russia for its illegal war of aggression,” Beyer said in a statement.
Trump also faced criticism from several senators, including Republicans, over a recent diesel agreement with Russia, under which he agreed to lift sanctions on Russian exports, in exchange for Russia agreeing to supply diesel to global markets in an attempt to reduce fuel prices. Lawmakers who criticized the agreement said it would help finance Moscow's war in Ukraine.
Kirill Dmitriev, the Russian President's investment envoy, described the exemption issued by Trump as a “truly historic moment,” and said in a post on the “X” platform that this legislation could have effectively led to the cessation of all aspects of economic cooperation between Russia and the United States.
European Central Bank President Christine Lagarde stressed the importance of the soundness of public finances, in a speech she delivered to ministers responsible for budgets from around the world in Thailand.
She said in her statement before the International Monetary and Financial Committee, which includes finance ministers and central bank governors from around the world, that financial sustainability remains a “fundamental pillar” of broader economic stability, according to Bloomberg News Agency.
Lagarde added: “It is important to maintain sound fiscal policies, including adherence to fiscal rules, and where debt is high, spending priorities must be rearranged, and the efficiency, efficiency and effectiveness of public finances must be enhanced, to rebuild protective barriers.”
She added: “Governments must seek to ensure that any fiscal response to the energy shock is temporary, targeted, and tailored.”
Lagarde's comments come after a week of tense discussions in the Thai capital, where the International Monetary Fund held its annual meetings. Discussions focused on the risks surrounding the global economy as it faces increasing levels of debt, a revolution in artificial intelligence, and increasing complexities in the geopolitical arena.
