(Adds details on U.S. Treasuries holdings, background on latest
Fed custody data and analyst comment)
NEW YORK Aug 28 Foreign central banks' holdings
of U.S. Treasuries rose above $3 trillion in the latest week to
their highest level this year, suggesting solid overseas
appetite for Uncle Sam's debt, according to Federal Reserve data
released on Thursday.
Overseas central banks' ownership of Treasuries grew by
$21.932 billion in the week ended Aug. 27 to $3.013 trillion,
the highest since the week ended Dec. 19 when it stood at $3.021
"It's a big level that people look at. The absolute level of
U.S. debt has been going up," said Gennadiy Goldberg, interest
rate strategist at TD Securities in New York.
Foreign central banks often accumulate Treasuries to hold
the value of their currencies against the dollar in a bid to
help their exporters.
At the end of June, China and Japan remained the top two
holders of U.S. Treasuries with combined holdings worth $2.4
trillion, which were roughly 19 percent of all publicly held
federal debt securities.
In recent years, foreign central bank officials have said
they would reduce their reserve holdings away from the
Meanwhile, foreign central banks' holdings of debt issued by
mortgage agencies Fannie Mae and Freddie Mac edged up $16
million to $285.934 billion in the latest week, Fed data showed.
This week, the Treasury Department sold $93 billion in
fixed-rate, coupon-bearing bonds to solid demand.
Auction data suggested keen demand from indirect bidders
which include foreign central banks for the $29 billion supply
in two-year notes, $35 billion in five-year debt and $29 billion
in seven-year securities.
(Reporting by Richard Leong; Editing by Lisa Shumaker)