While Russian President Vladimir Putin has been seeking to mend relations with his U.S. counterpart, his government has been dumping U.S. debt in a way seldom seen in global markets, financial analysts say.
Data released by the U.S. Treasury this week shows that Russia, which once ranked among the top 10 foreign holders of U.S. Treasury securities, by May had sold off all but about $15 billion of that debt -- down from nearly $100 billion in March.
The unusually rapid selloff of U.S. bonds -- which many analysts are attributing to rising U.S.-Russia tensions and in particular, U.S. sanctions imposed on Russian billionaires this year -- caused Russia to fall below the $30 billion threshold for being included on the Treasury's list of its "major bondholders."
Russia owned as much as $176 billion in U.S. debt in 2010, according to Treasury figures, but it began unloading its U.S. holdings after former U.S. President Barack Obama started imposing sanctions on Moscow over its aggression in Ukraine in 2014.
The sanctions have continued and increased under the administration of U.S. President Donald Trump, who under a sanctions law enacted last summer announced new measures earlier this year targeting 38 individuals and organizations that benefit from close ties to Putin -- including seven Russian oligarchs and 17 government officials.
Nearly half of the Russian selloff occurred since those sanctions were imposed in April.
A $30 billion to $40 billion drop in Treasury security holdings by a foreign country during a one-month time period is significant, but not unprecedented, said Boris Rjavinski, a financial strategist at Wells Fargo bank.
China's holdings of U.S. Treasuries declined by roughly $200 billion over several months when the country was going through a currency exchange adjustment process a few years ago, Rjavinski told USA Today.
The market size for Treasurys is more than $15 trillion, large enough to absorb such changes, he said.
China, which holds $1.2 trillion of U.S. debt, remains the top holder of U.S. Treasuries, followed by Japan, Ireland, Brazil, and the United Kingdom.
As it has sold off Treasury securities, Russian Central Bank statistics show that the country has shifted into buying large amounts of gold, with Russia recently overtaking China as the world's biggest holder of gold, with $80.5 billion in holdings.
Elvira Nabiullina, the head of the Central Bank of Russia, said the shift from Treasuries into gold had been due to an assessment of financial, economic, and geopolitical risks, RT reported.
Nabiullina said the gold purchases were helping to diversify Russia's wealth.
Russia signaled as far back as 2009, during the global financial crisis and recession, that it planned to reduce the percentage of Treasuries in its foreign-exchange reserves.
Although the drop in Russia’s U.S. Treasury holdings was large, it represented a "drop in the bucket" in the context of the overall U.S. Treasury market, which is the world's largest market, said Charlie Ripley, senior investment strategist for Allianz Investment Management.
"Investors should be more worried if China were to start selling significant amounts of U.S. Treasuries in retaliation to the escalating trade tensions," Ripley said.
Asked about the shift in Russia's holdings, a Treasury spokesman said that the Treasury market was the world's "deepest and most liquid" and demand remained "robust."