ING signals a profound change as China, India, and Brazil reduce billions in U.S. Treasury debt in a single month

Source: Yellow Original Title: ING signals a deep change as China, India, and Brazil cut billions in U.S. Treasury debt in a single month

Original Link: https://yellow.com/es/news/ing-señala-un-cambio-profundo-mientras-china-india-y-brasil-reducen-miles-de-millones-en-deuda-del-tesoro-estadounidense-en-un-solo-mes The banking giant ING has warned that BRICS nations continue to reduce their exposure to the U.S. Treasury market, after data showed that China, India, and Brazil collectively sold $28.8 billion in Treasury holdings in a single month.

What happened

In a research note published this week, ING pointed out the data from the U.S. Treasury International Capital for October, which shows a new decline in Treasury bond holdings among the major BRICS economies.

China reduced its holdings by 11.8 billion dollars, India by 12 billion, and Brazil by 5 billion during the period, highlighting what the bank described as a continuous and gradual withdrawal of U.S. public debt by the bloc.

ING warned that Treasury flows are inherently volatile and should not be interpreted as evidence of a sudden or disorderly exit from U.S. assets.

However, it pointed out that the constant decrease in holdings among BRICS nations has become a persistent trend rather than a one-time adjustment.

In the broader context of the official foreign sector, holdings of U.S. Treasury bonds and notes fell by $22 billion in October, a decline partially offset by an increase in short-term Treasury bill holdings.

The bank attributed part of the reduction in India to foreign exchange market interventions aimed at supporting the rupee, and also acknowledged that geopolitical considerations may be contributing to the broader pattern of lower exposure among BRICS economies.

ING added that this trend contrasts with the constant demand from private investors, who have continued to be willing buyers of U.S. Treasury bonds despite softer inflation in the U.S. and changing expectations about future rate cuts by the Federal Reserve.

Why it is important

ING emphasized that its longer-term outlook for the US dollar is not based on massive foreign sales of Treasury debt, but on the expectation that international investors may increasingly hedge their exposure to US assets.

However, the bank stated that the persistent reduction of Treasury bond holdings by BRICS nations is a phenomenon that deserves close monitoring, especially as global reserve managers reassess currency and duration risks in a context of changing geopolitical and monetary conditions.