Did you think that China was the largest owner of US government debt? They were.
But now the Fed has bought so many US treasuries that they are now the largest owner of treasuries. The massive federal budget deficit is not being financed by the Chinese but by the Fed. It has stepped up and is buying every treasury security they can buy. They are currently in the midst of a massive $600 billion quantitative easing.
Remember that the price of bonds goes down if the yield goes up. That means that the Fed is losing money on their whole portfolio! They are losing massive amounts of money. Probably tens of billions of dollars. Soon to be hundreds of billions of dollars.
Having said that, I’m sure that they will not mark to market their portfolio! Remember that they are privately owned and don’t want to damage the profitability of their owners, the major US banks.
But just think what a scam this is! The US treasure spends trillions of dollars that it doesn’t have. The Fed buys this debt so the government can continue to spend like drunken sailors.