The US's biggest foreign lender China has boosted its Treasury bond holdings to near record levels of $1.3 trillion in October. This after the Fed calmed financial markets by saying in September it would continue its monthly $85 billion bond purchases.
The total value of US government bonds grew by $10.7 billion, or by 0.8 percent Treasury data shows. This compares to the July 2011 figure when it reached a record $1.314 trillion.
The pace of Chinese bond buying has not stopped, and that increase in buying is expected to be more than the record 30 percent rise seen in 2010.
The Chinese became more enthusiastic about the prospects for the US economy after the US Federal Reserve said in September it would keep its multi-billion dollar money injections into the economy.
The optimism about the US is expected to grow further, as 66 percent of analysts surveyed by Bloomberg don’t expect the Fed to start winding down its money injections at the FOMC meeting this week.
On top of that, a compromise two-year budget that’ll keep the US economy away from another costly government shutdown till 2015 is expected to be signed by President Barack Obama as early as this week, which signals to investors that the US is on its way to more stability.