What you’re not hearing about foreign holders selling US Treasuries

We hear often the concern that the US will lose its reserve currency status, displaced by a new currency backed primarily by China, possibly collateralized by gold. With the RMB not freely convertible, and controlled by a dictator, we see little reason to think it will succeed. Foreign official holders have run off their Treasury holdings over the last four years, having peaked when Treasury yields were low and now falling when yields are higher. But overall foreign holdings keep making new all-time highs. China has fallen to the number two holder, behind Japan, and barely ahead of the UK. The foreign-held share of outstanding issuance has fallen, meaning new issuance has exceeded new buying. But the share is only back to where it was historically until 2004. There have been threats to dollar hegemony throughout the post-war era, and so far there is little evidence that this one is any more salient. That is not a reason for complacency about continued US profligacy in issuance.