DoubleLine's Vitaliy Liberman noticed Canada's US Treasury holdings surged to nearly $600 billion, quadrupling in five years despite tariff tensions. Wall Street insiders say "it's not Canada. It's the other Canada" — meaning China.
Officially, China cut its Treasury holdings in half to $618 billion since 2016 and reduced mortgage-bond ownership by ~50% in 2024. But strategists suspect Beijing is moving securities to non-US custodian banks in countries like Canada, masking true ownership in Treasury data. This tactic lets China appear to reduce dollar recycling while still financing US deficits.
Similar patterns emerged in 2014 when Belgium's holdings spiked. China's State Administration of Foreign Exchange and Canada's regulator declined comment; the US Treasury didn't respond. The episode highlights the dollar's irreplaceable role: even rivals must park surplus dollars in Treasuries.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing