Japan and China have reduced their holdings of US Treasuries ahead of the presidential election due to uncertainty regarding President-elect Donald Trump’s economic policies.

Japanese investors sold a record $61.9 billion, while Chinese funds offloaded $51.3 billion in the third quarter. This selling spree has been driven by concerns over Trump"s low-tax, high-tariff approach, which has unsettled investors and led to a decline in the return on Treasuries.

Shoki Omori, chief Japan desk strategist at Mizuho Securities Co., explained that the risk of a Trump victory and expectations of higher US yields have negatively impacted sentiment towards bonds in Japan. In China, geopolitical risks have also prompted investors to divest from Treasuries, reflecting a broader trend of caution among major foreign holders of US government debt.