FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the U.S. Treasury building in Washington, U.S., January 20, 2023. REUTERS/Kevin Lamarque/File Photo

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) -Foreign holdings of U.S. Treasuries rose to record levels in June, topping $9 trillion for a fourth straight month, data from the Treasury Department showed on Friday.

Holdings of U.S. Treasuries climbed to $9.13 trillion in June, up from $9.05 trillion in May. Compared with a year earlier, Treasuries owned by foreigners were up nearly $1 trillion, or 10% higher.

However, on a transaction basis, the U.S. experienced outflows of $5 billion after buying roughly $147 billion in Treasuries in May, the largest since August 2022. In April, there was an outflow of $40.8 billion as President Donald Trump's back-and-forth tariff policies roiled markets.

Japan remained the largest non-U.S. holder of Treasuries, with a record $1.147 trillion in June, up $12.6 billion from the previous month's $1.134 trillion.

UK investors, the second-largest owner of U.S. government debt, raised their pool of Treasuries to another record of$858.1 billion, up 0.6% from $809.4 billion in May.

The UK overtook China as the second-largest non-U.S. holder of Treasuries in March. The UK is widely viewed as a custody country, generally a proxy for hedge fund investments. Other countries used by hedge funds for custody services include the Cayman Islands and the Bahamas.

Treasury holdings of China, the third-largest owner of U.S. government debt, were little changed at$756.4 billion, compared with $756.3 billion in May, which was the lowest since February 2009 when the country's stock of Treasuries dropped to$744.2 billion.

China's holdings were way below their largest level of more than $1.3 trillion held between 2012 and 2016. China, the world's second-largest economy, has been gradually dumping Treasuries to bolster its currency, the yuan. Analysts said a slowing Chinese economy, post-COVID challenges, and trade barriers have diminished China's inflows from exports.

Data also showed that other foreign investors in Asia like Hong Kong and India reduced their cache of Treasuries to $242.6 billion and $227.4 billion, respectively.

Foreign investors, meanwhile, also poured back into U.S. equities, injecting inflows of $163.1 billion in June that followed $115.8 billion in purchases in May.

Data also showed that the net capital inflow into the United States totaled just $77.8 billion, down 75% from the revised$318.1 billion in May, which was the largest since September 2024.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Mark Porter and Will Dunham)