Is Japan selling US Treasuries?
The data cannot answer that. The US Treasury TIC report publishes the market value of Japan's holdings, not its trades. When Treasury yields rise, an untouched portfolio is worth less, so a falling holdings figure mixes real selling with price decline. The two cannot be separated. What the series does show is the size of the position: Japan is the largest foreign holder of US Treasuries, and a yen defense would be funded from it.
Why would Japan sell US Treasuries?
To defend the yen. If the yen weakens too far against the dollar, the Japanese authorities sell dollar assets, mostly US Treasuries, and use the dollars to buy yen. The sale is a currency defense, not a judgment on US credit. The effect on the Treasury market is the same either way: extra supply from the largest foreign holder pushes yields up.
How much does Japan hold in US Treasuries?
The current figure and its date are at the top of this page: over a trillion dollars, the largest foreign holding of US government debt. Two points. The figure is market value, so it moves with bond prices as well as with trading. And TIC data is published about two months late, so it shows the position then, not today.
What would happen if Japan dumped US Treasuries?
Treasury yields would rise. How much depends on the pace and on who else is buying. Treasury yields set the floor for mortgage rates, corporate borrowing costs and the rate used to value stocks, so a sustained rise reprices all of them. Stocks fall because the risk-free benchmark moved, not because earnings changed. Japan also holds over a trillion dollars of US stocks, so a broad sale would hit share prices directly too.
What does the yen have to do with US Treasuries?
The yen is the trigger. Japan holds Treasuries as the reserve for defending its currency. The weaker the yen gets against the dollar, the more pressure there is to sell Treasuries and buy yen. This is why the page shows the exchange rate next to the holdings: the holdings are the reserve, and the yen is what could force its use.
Why is the holdings data two months old?
The TIC report on foreign holdings is released monthly, but each release covers a period about two months in the past. The lag applies to everyone who quotes the same report. This page prints the exact date on every holdings figure, and keeps the yen and the 10-year yield, which are current, in a separate row.