China adds holdings of U.S. Treasuries

May purchases rise amid geopolitical tensions

China and Japan increased their holdings of U.S. government debt in May, as foreign purchases of Treasuries rose for the first time in three months  while benchmark 10-year yield hit a near seven-year peak, data from the U.S. Treasury Department showed.

Foreigners bought U.S. Treasuries in May, led by private investors, in a safety bid amid geopolitical tensions linked to trade and Italy-related turmoil.

What was striking from the data was Russia's exclusion from the list of Treasury holders in May, analysts said. Data showed that Russia's holdings already had a massive drop to $48.7 billion in April from $96.1 billion in March.

Analysts said Treasury selling could be related to sanctions imposed by the U.S. on Russia in April, as the latter focused on increasing purchases of gold instead.

The Trump administration imposed new sanctions on April 6 on seven of Russia's richest men and 17 top government officials.

China and Japan are the two biggest foreign holders of U.S. government securities.

China's holdings of Treasuries rose to $1.183 trillion from $1.182 trillion in April, while Japan's increased to $1.049 trillion from $1.031 trillion in April.

Overseas investors bought a hefty $26.69 billion in U.S. Treasuries in May, after net sales of $4.78 billion and $4.92 billion in April and March, respectively. Private investors purchased $50.28 billion in Treasuries, more than offsetting the selling of $23.8 billion by foreign official institutions, data showed.

The increase in U.S. Treasuries investment was also reflected in the rise in holdings by major Treasury holders to $6.21 trillion in May, from $6.17 trillion the previous month.

Italy was also in the headlines in May, as the euro zone's third-largest economy, mired in wrangling among its political parties, had been seeking a new government.

Investors also took advantage of yields topping out in May to re-enter the market at better prices.