UPDATE 1-Foreign holdings of US Treasuries rise for 3rd month in January as yields decline -data

(Adds details, byline) By Gertrude Chavez-Dreyfuss NEW YORK, March 15 (Reuters) - Foreign holdings of U.S. Treasuries rose for a third straight month in January, data from the U.S. Treasury Department showed on Wednesday, with yields continuing their decline as investors reckoned that the Federal Reserve was nearing the end of its tightening cycle. U.S. economic data during the month showed signs of slowing down as the Fed's past rate increases started to take their toll on the economy. Offshore holdings rose to $7.402 trillion in January from $7.318 trillion the previous month. But compared with a year earlier, Treasuries held by foreigners fell 3.3% in January. The benchmark 10-year Treasury yield started January at 3.792% , falling to 3.529% by the end of the month. U.S. 10-year yields hit a 15-month high of 4.338% in October last year. The decline in U.S. Treasury yields, which move inversely with prices, is a sign investors have started to dip their toes back into to the debt market. The inflow into bonds also came after Treasuries notched the worst year in their history in 2022 following the Fed's most aggressive monetary policy tightening since the 1980s. Japan remains the largest non-U.S. holder of Treasuries with $1.104 trillion in January. That was up from $1.076 trillion in December. Japan though had been selling Treasuries for most of last year to help defend a struggling yen. Data also showed holdings of China, the second biggest non-U.S. holder of Treasuries, fell once again to $859.4 billion, down from $867.1 billion in December. China's holdings fell for a sixth straight month and were the lowest since May 2010 when it had $843.7 billion. Much like Japan last year, the world's second largest economy has been unloading Treasuries to help boost its slumping currency, the yuan, against a robust dollar, which had benefited from a string of big interest rate hikes by the Fed. On a transaction basis, Treasuries posted foreign inflows of $50.9 billion in January, from $19.98 billion in December. Treasuries have seen inflows from foreign investors for nine straight months. Data also showed outflows of $27.52 billion in U.S. stocks in January, compared with inflows of $54.98 billion the previous months. Foreigners also bought $2.42 billion in U.S. corporate bonds, compared with $14.38 billion in December. The sector has seen foreign inflows for 13 straight months. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Mark Porter and Marguerita Choy)

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