Middle Eastern countries reduce holdings of US Treasury bonds
Major oil-producing countries in the Middle East, including Saudi Arabia, are cutting their holdings of US Treasury bonds, which together amount to about $300 billion, or roughly 3.5% of all foreign-owned Treasury securities. This move is significant as it may impact US financial markets and the global economy.
According to Bank of America, these oil-exporting countries might be selling these assets to offset their revenues from oil sales. The volume of US Treasury bonds held at the Federal Reserve Bank of New York has fallen to its lowest point since 2012, decreasing by $82 billion since February and now totaling $2.7 trillion.
Experts also note that among the sellers are oil-importing countries like Turkey, India, and Thailand, which may favour higher oil prices denominated in dollars. For example, Turkey's Central Bank sold US Treasury securities worth $22 billion on 27 February.
US Treasury bonds have traditionally been considered a safe asset for central bank reserves. However, shifts in their portfolios can reflect strategic economic decisions related to fluctuations in global oil and currency markets.
Therefore, changes in the ownership structure of Treasury bonds may signal emerging trends in global finance, warranting close attention from investment analysts and government financial authorities.
