The Russian government, previously considered a significant holder of U.S. debt, has been steadily — and sharply — paring down the vast majority of its holdings of U.S. Treasury securities.
Russian holdings of Treasury securities declined 84 percent between March and May, falling to $14.9 billion from $96.1 billion in just two months, according to a U.S. Treasury Department report released July 18.
Financial bloggers have pounced on the news as being potentially ominous, but a few analysts suspect the transactions are more closely related to Russia's sanctions-hit economy, and portfolio allocation.
Russia's ownership of U.S. debt is eclipsed by that of China and Japan, both of whom actively manage their currencies and hold more than $1 trillion each in Treasuries on their books. In fact, China's vast holdings have been cited by some observers as a "nuclear option" in a Chinese-American trade war, with the U.S. economy seen as vulnerable to Chinese selling that could drive up yields.
Major foreign holders of U.S. debt accounted for $6.21 trillion of current U.S. debt, while the total public debt outstanding is $21.3 trillion as of July 26.