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 interest rate path. Several participants supported a dual description of the committee’s future rate decisions, indicating that if inflation remains above target, 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; China’s holdings decreased by $400 million to $6.835 trillion.

Major U.S. stock indices all closed higher

On February 18th, local time, the three major U.S. stock indices all closed higher. 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; the Nasdaq gained 0.78% to 22,753.63 points.

Large tech stocks all gained strength, 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 artificial intelligence (AI) infrastructure. Additionally, Apple rose 0.18%, Google C increased 0.37%, Microsoft gained 0.69%, Amazon rose 1.81%, and Tesla increased 0.17%.

Storage concept stocks performed well, 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 Chinese concept stocks, 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 and GDS fell 0.1%, while 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 future direction of Federal Reserve interest rates. Spot gold rose about 2% on the 18th, trading near $4,970 per ounce in the Asian morning of the 19th; spot silver increased over 5% on the 18th, trading near $77 per ounce in the Asian morning of the 19th.

Federal Reserve meeting minutes show internal disagreements

At the January monetary policy meeting, the Federal Reserve announced no change in interest rates. Fed Governors Christopher Waller and Stephen Mester voted against the decision, supporting a 0.25 percentage point rate cut.

The latest January meeting minutes reveal 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 show that when discussing the outlook for monetary policy, several participants indicated that if inflation declines as expected, further lowering the federal funds rate target range might be appropriate. Some participants believed that during the committee’s careful assessment of the latest data, maintaining the policy rate unchanged for a period might be suitable, and some thought that only after inflation clearly returns to a downward trajectory would further easing be necessary.

Meanwhile, some participants supported a dual description of the committee’s future rate decisions, indicating that if inflation remains above target, raising the federal funds rate could also be appropriate. This wording suggests 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 monetary easing amid high inflation could be misinterpreted as a weakening of the committee’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 foreign exchange market to support the yen, with rare assistance from the U.S. The yen surged rapidly during the New York trading session on January 24. Reports indicated that the New York Fed conducted a so-called “interest rate check.” The latest Fed minutes confirm this, stating that these quotes were requested entirely on behalf of the U.S. Treasury, with the New York Fed acting as a fiscal agent, requesting these quotes.

U.S. overseas “debt holders” reduced 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 that month. Japan, the largest overseas “debt holder,” reduced its holdings 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 continued to increase its holdings in recent years, surpassing China in March 2025 to become the second-largest overseas “debt holder” of the U.S. Since 2025, the UK’s 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 released on Wednesday shows that overseas investors bought a net $1.55 trillion in U.S. long-term financial assets in 2025, higher than last year’s $1.18 trillion. Of this, $658.5 billion flowed into stocks and $442.7 billion into U.S. Treasuries.