Full Breakdown
China’s Reported Treasury Holdings Fall While Canada’s Rise
By Drooid · · How we work
Background & Context
China’s U.S. Treasury portfolio has contracted sharply since 2021. In April 2022 the country held roughly $1 trillion; U.S. Treasury data released in August 2026 shows holdings at $591 billion, the lowest level in 18 years. At the same time, Canada’s reported holdings have surged to $464.6 billion at the end of August 2026—up from $106 billion in 2021 and placing the country fifth among foreign holders. Analysts link the divergent trends to shifting investment strategies and the way U.S. data attributes securities held through foreign custodians.
Data & Statistics
- China’s reported holdings: $590.7 billion in August 2026, down $27.3 billion from July 2026 and down from $700 billion a year earlier.
- Canada’s reported holdings: $464.6 billion in August 2026, up $38.3 billion from July 2026 and more than four-fold the 2021 level.
- Other major holders (August 2026): Japan $1.068 trillion, United Kingdom $1.010 trillion, Belgium $490.5 billion.
- Yield differential (Oct 16 2026): 10-year U.S. Treasury yield ? 5.1 % versus Canadian 10-year yield ? 3.83 %, a spread of about 1.3 percentage points.
Official Statements & Responses
The U.S. Treasury Department notes that its Treasury International Capital (TIC) data may not always identify the ultimate owners of securities held through international intermediaries, meaning that bonds beneficially owned by Chinese institutions but held in Canadian custodial accounts can appear as Canadian holdings.
Analysis of Custodial Bias
Economists describe “custodial bias” as the tendency for U.S. Treasury statistics to attribute securities to the country where the custodian is located rather than to the ultimate beneficial owner. Tiffany Wilding of Pacific Investment Management Co. (Pimco) highlighted China’s historical use of foreign institutions, such as Belgium, to hold U.S. government bonds, making the hypothesis of Chinese investment through Canadian custodians plausible.
Conversely, Derek Holt of Bank of Nova Scotia points to the yield advantage of U.S. Treasuries—approximately 1.3 percentage points higher than comparable Canadian bonds on Oct 16 2026—as a primary driver of genuine Canadian demand. Doug Porter, chief economist at the Bank of Montreal, says both genuine Canadian investor appetite and foreign investors using Canadian custodians likely contribute to the rise.
Conflicting Reports & Gaps
- Ownership attribution: While some analysts suggest a sizable portion of China’s holdings may be masked in foreign custodial accounts, others argue that the increase in Canadian holdings can be explained largely by domestic investor behavior. The sources do not provide definitive data on the ultimate beneficial owners, leaving the true extent of custodial masking unresolved.
- Future exposure: Separate Chinese investment statistics list $198.7 billion in U.S. debt securities, but these figures do not break down holdings by custodian location, preventing a precise comparison with the reported $590.7 billion figure.
What’s Next
The Treasury’s next TIC release, covering September 2026, is scheduled for November 18. That data will indicate whether Canada’s reported holdings continue to approach those of Belgium and China and may shed further light on the impact of custodial arrangements on the public rankings of foreign Treasury holders.