Overseas "creditors" reduce their holdings of U.S. Treasury bonds

Local time February 18th (Wednesday), the three major U.S. stock indices closed higher across the board. At the close, the Dow rose 0.26%, the S&P 500 increased 0.56%, and the Nasdaq gained 0.78%.

The latest Federal Reserve meeting minutes released on January show significant disagreement within the Fed regarding the future path of interest rates. Several participants supported a dual approach to future rate decisions, indicating that if inflation remains above target levels, raising the federal funds rate target range could also be appropriate.

On the 18th, the U.S. Department of the Treasury released the December 2025 International Capital Flows (TIC) data. The data shows that in December last year, foreign investors’ holdings of U.S. Treasuries decreased by $88.4 billion, down to $9.27 trillion, the lowest level since October. Among the largest foreign holders of U.S. debt, Japan’s holdings in December decreased by $17.2 billion to $11.855 trillion; the UK’s holdings decreased by $23 billion to $8.66 trillion; and China’s holdings decreased by $400 million to $6.835 trillion.

Major U.S. stock indices close higher collectively

On February 18th, local time, the three major U.S. stock indices closed higher across the board. At the close, the Dow rose 0.26% to 49,662.66 points; the S&P 500 increased 0.56% to 6,881.31 points; and the Nasdaq gained 0.78% to 22,753.63 points.

Large-cap tech stocks all gained, with Nvidia up 1.63% and Meta up 0.61%. In news, Nvidia recently announced a new long-term partnership with Meta, covering local deployment, cloud, and AI infrastructure. Additionally, Apple rose 0.18%, Google Class C increased 0.37%, Microsoft gained 0.69%, Amazon rose 1.81%, and Tesla increased 0.17%.

Storage concept stocks performed strongly, with Micron Technology up 5.3%, SanDisk up nearly 1.7%, Western Digital up nearly 4.4%, and Seagate Technology up nearly 2%. The previous day’s 13F filings showed that hedge fund giant David Tepper’s Appaloosa Management made significant purchases of Micron Technology.

In the Chinese concept stocks sector, the Nasdaq Golden Dragon China Index fell 0.04% to 7,580.87 points. Popular Chinese stocks had mixed performances: Xiaopeng Motors fell nearly 0.9%, Li Auto declined 0.4%, NIO dropped 0.2%, Xpeng Motors and GDS (GDS Holdings) fell 0.1%. Pinduoduo rose over 1%, Baidu increased nearly 0.4%, and Alibaba gained over 0.2%.

In the precious metals market, investors continue to assess geopolitical risks and the Federal Reserve’s future rate trajectory. Spot gold rose about 2% on the 18th, trading near $4,970 per ounce in early Asian trading on the 19th; spot silver increased over 5%, trading near $77 per ounce in early Asian trading on the 19th.

Federal Reserve meeting minutes reveal internal disagreements

At the January Federal Open Market Committee (FOMC) meeting, the Fed announced no change in interest rates. Fed Governors Christopher Waller and Stephen M. Miller voted against the decision, supporting a 0.25 percentage point rate cut.

The newly released January meeting minutes show significant disagreement within the Fed regarding the future interest rate path. Besides the dovish and wait-and-see camps, some participants mentioned the possibility of rate hikes.

The minutes indicate that during discussions on monetary policy outlook, several participants stated that if inflation declines as expected, further lowering the federal funds rate target range might be appropriate. Some participants believed that maintaining current policy rates for a period while carefully evaluating the latest data could be suitable, and some thought that only after inflation clearly reverts to a more sustainable path would further easing be necessary.

Meanwhile, some participants supported a dual approach to future rate decisions, suggesting that if inflation remains above target, raising the federal funds rate could also be appropriate. This wording shows that some officials are increasingly concerned about inflation and do not rule out the possibility of rate hikes again.

The minutes also show that most participants believe that the downside risks to employment have eased in recent months, but the risk of persistent inflation remains. “Some participants warned that further easing in monetary policy amid high inflation could be misinterpreted as a weakening of the Fed’s commitment to the 2% inflation target, potentially entrenching high inflation.”

Additionally, the minutes confirm that the New York Fed inquired about the yen exchange rate. Last month, there was speculation that Japanese authorities might intervene directly in the forex market to support the yen, with rare cooperation from the U.S. The minutes state that on January 24th, the yen surged rapidly during New York trading hours. Reports indicated that the New York Fed conducted a so-called “interest rate check,” which the latest minutes confirm was done on behalf of the U.S. Treasury, with the Federal Reserve Bank of New York acting as a fiscal agent requesting these quotes.

U.S. foreign “lenders” reduce holdings of Treasuries in December 2025

On the 18th, the U.S. Department of the Treasury released the December 2025 TIC data. The data shows that in December last year, foreign investors’ holdings of U.S. Treasuries decreased by $88.4 billion, down to $9.27 trillion, the lowest since October.

Among the largest foreign holders, Japan and the UK saw significant declines in their U.S. Treasury holdings in December. Japan’s holdings decreased by $17.2 billion to $11.855 trillion; the UK’s holdings decreased by $23 billion to $8.66 trillion.

Over the course of the year, holdings by Japan and the UK increased. Japan’s holdings in U.S. Treasuries increased by $124 billion in 2025. The UK has been steadily increasing its holdings in recent years, surpassing China in March 2025 to become the second-largest foreign holder of U.S. debt. In 2025, UK holdings increased by $143.2 billion.

China gradually reduced its holdings of U.S. Treasuries, decreasing by $400 million in December 2025 to $6.835 trillion, the lowest since 2008, with a total reduction of $75.5 billion over the year.

Furthermore, the Treasury’s data shows that in 2025, foreign investors net bought $1.55 trillion in U.S. long-term financial assets, higher than last year’s $1.18 trillion. Of this, $658.5 billion flowed into stocks and $442.7 billion into U.S. Treasuries.