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China reduces Treasury holdings for 3rd straight month

China, the biggest foreign holder of U.S. Treasurys, reduced its ownership of U.S. bonds, bills and notes to $1.165 trillion in August, down from $1.171 trillion in July.

This is the third consecutive month that China has reduced its holdings of U.S. Treasurys, Treasury Department data showed Oct. 16.

The sum total in August of all net foreign acquisitions of long-term securities, short-term U.S. securities and banking flows was a net inflow of $108.2 billion. Of this, net foreign private inflows were $104.6 billion, and net foreign official inflows were $3.6 billion.

Japan, the largest foreign owner of Treasurys after China, decreased its holdings to $1.03 trillion from $1.036 trillion in July while Saudi Arabia increased its ownership to a record $169.5 billion from $166.8 billion.

"Holdings have declined over the past three months and may continue to do so as the ongoing trade war sours the relationship between China and the U.S. and thus reduces their appetite for Treasurys," Thomas Simons, an economist at Jefferies LLC, wrote in a note after the release, Bloomberg News reported.

Overall foreign holdings of U.S. Treasurys rose to $6.287 trillion in August from $6.252 trillion in July, the department said.