Author by Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - Foreign holdings of U.S. Treasury bonds soared to record highs in March.

In March, shares in U.S. Treasury bonds soared to $90.5 trillion, an all-time peak, up $233 billion from $8.81 trillion in February. Foreigners' government bonds have increased by nearly 12% compared to a year ago.

Some analysts say this trend is likely to change as the Trump administration caused a massive trade shock on April 2, which has led to an increase in effective tariff rates, especially for Chinese goods.

This drove the U.S. Treasury sell-off, at some point the benchmark 10-year yield exceeded 70 basis points (bps), up nearly 4.6% over the period from April 3 to 11. Analysts say the sell-off could include sales from foreign investors.

Since then, Trump has suspended tariffs for 90 days, and the treasury market has stabilized, although foreign investors may still retain U.S. assets.

The data also shows that UK investors have surpassed China as the second largest non-U.S. Treasury bond holder, holding $779 billion. The UK is often considered a custodial account, usually a proxy for a hedge fund. Other countries where hedge funds use custody services include the Cayman Islands and the Bahamas.

Japan remains the largest treasury debt holder, with a hiding space of $11.13 trillion in March, about 0.4% higher than the $11.126 trillion held in February. Japan's treasury load has increased for the second consecutive month.

On the other hand, China has reduced its treasury hiding to $765.4 billion in March, down from $784.3 billion last month. In December, China's shares were $759 billion, the lowest since February 2009, when the country's Treasury shares fell to $744.2 billion.

Analysts say that the Treasury holdings of Chinese investors have been on a downward trajectory since 2018.

The benchmark for 10 years of treasury production started at 4.18% starting in March and ended at a rate of 4.425%.

Data shows that major U.S. asset classes also show a mixture of inflows and outflows.

On a transaction basis, holdings in bonds and notes showed a net inflow of $123 billion in March and $1006.2 billion in February thereafter.

Data shows that foreign investors continue to buy U.S. companies, with $600.4 billion inflows and $10.4 billion outflows from agents.