The surge in U.S. government bond yields in recent months can be attributed to the reduced participation of China and the Federal Reserve in the market 

Historically, China and the Fed have collectively acquired trillions of dollars in U.S. Treasury bonds, playing a significant role in financing deficits after the 2008 financial crisis and the COVID pandemic 

Over the last year, the Federal Reserve has decreased its U.S. Treasury bond holdings by $650 billion 

Public data indicates that China's official holdings have decreased by more than $50 billion during the same period, with a decline of nearly $300 billion since early 2021 

The Federal Reserve is not actively selling U.S. Treasuries but allowing them to mature and "roll off the balance sheet" without reinvestment 

There are limitations to publicly available data on China's holdings, leading to speculation that China's holdings may be flat, with some bonds stored in undisclosed locations 

Both the Federal Reserve and China have reduced their purchases of U.S. Treasury bonds, and this has implications for the bond market 

The Federal Reserve began purchasing long-term Treasuries as part of quantitative easing after the 2008 financial crisis to stimulate the U.S. economy, reduce unemployment, and boost growth and inflation 

In contrast, today, the Federal Reserve is engaging in quantitative tightening, reducing its bond holdings due to low unemployment and inflation concerns 

China, facing economic challenges and a weakening currency, may be selling some of its Treasuries and reducing exposure to the U.S. financial system