UST department said foreign demand fell for US Treasuries in Dec09 as China purged holdings of government debt ($34.2bn selloff in the month). This leaves Japan as the largest holder of US government debt at $768bn. Countries are abandoning the "flight to safety" strategy adopted during the economic crisis, this could mean the US will have to pay more to service its debt. The overall monthly sell-off of $53bn was the largest on record. Biggest foreign holders of Treasuries are Japan, China, UK and oil-exporting countries. Japan, China and UK hold more than 50% of the foreign holdings of US Treasuries.
The US trade deficit is projected to be $1.56 trillion in 2010 (10.6% of GDP). Foreign purchases of US equities rose to $20.1bn in December09 from $9.7bn in Nov09. There is large difference between the reported budget deficit and change in debt because of 1) Social Security Surplus, which reduces the "off budget" deficit in the media, 2) Non-budgeted spending e.g. wars.
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