China Slashes US Treasury Holdings Amid Iran War Fears and Fed Uncertainty

China's holdings of US Treasuries have reached an almost two-decade low, dropping to $633.4 billion in June from $659.3 billion in May, according to data released by the US Treasury Department.

This marks the lowest level since September 2008, when China held $618.2 billion worth of US Treasuries, as per Chinese financial data provider Wind.

The decline comes amid heightened geopolitical tensions and uncertainty over the policy outlook in the United States, with investors watching for potential disruptions to oil supplies and their implications for global growth and inflation.

June saw a resurgence of hostilities between the US and Iran, followed by a tentative ceasefire that eased fears of a wider conflict. Additionally, the month marked Kevin Warsh's debut policy meeting as chairman of the Federal Reserve, with investors left uncertain about future rate moves following the brief post-meeting statement.

US Treasury yields have risen to multi-year highs in recent months, particularly at the long end of the curve, due to concerns over Washington's fiscal sustainability.