China's holdings of U.S. Treasuries decline for 6th straight month in November

Data from the U.S. Treasury Department showed on Wednesday that China reduced holdings of U.S. Treasuries for a sixth straight month in November. Data showed China's holdings declined to $1.049 trillion, a drop of about $66 billion.

The drop in China's UST holdings was the steepest since December 2011. The world’s second-largest economy has been depleting its foreign-exchange reserves in an effort to support the yuan. The yuan had weakened around 4 percent against the dollar in October and November. The People’s Bank of China (PBoC) has burned through a quarter of its war chest since 2014.

"I’m not surprised since China’s reserves are shrinking -- they are selling Treasuries to prevent the yuan from weakening too much," said Priya Misra, the head of global rate strategy at TD Securities.

Data also showed foreigners bought $30.8 billion in long-term U.S. assets in November after buying $9.3 billion the previous month. Including shorter-dated securities, overseas investors purchased $23.7 billion in November, after buying $20.6 billion in October.

Japan’s portfolio decreased for fourth consecutive month, falling by $23.3 billion to $1.11 trillion, according to the data. Japan still remained the largest non-U.S. holder of Treasuries for a second straight month in November, holding $1.11 trillion in U.S. government bonds. Japan surpassed China last month as the largest holder of Treasuries.