China is driving a jump in Belgian holdings of Treasuries and is a key reason for a plunge in yields even as the Federal Reserve trims its stimulus to support growth, according to Bank of America Merrill Lynch.

The CHART OF THE DAY tracks a 41 percent surge in Belgian ownership of U.S. bonds in the five months through May to $362.4 billion. This came at a time when China, the largest foreign holder of Treasuries, kept its official stockpile around $1.27 trillion. Belgium is home to Euroclear Bank SA, a provider of securities settlements for foreign lenders, which indicates the increase in holdings reflects global rather than local demand, said David Woo, BofA’s head of global rates and currencies.

“Holdings in Belgium have skyrocketed,” New York-based Woo said in a July 24 email interview. “China is the only foreign official player that fits the Belgium numbers.”

The People’s Bank of China bought dollars in the first half of this year to weaken the yuan and stop uncontrolled inflows driven by speculators who saw the currency as a sure appreciation bet. This boosted the nation’s foreign-currency reserves to a record $3.99 trillion in June. China holds about a third of the world’s international reserve assets, excluding gold.

Belgium is the third-largest foreign holder of Treasuries, after China and Japan, official data show. Belgium’s gross domestic product in 2013 was $508 billion compared with China’s $9.2 trillion. The U.S. 10-year yield declined 53 basis points this year to 2.5 percent last week, compared with a decade average of 3.4 percent, data compiled by Bloomberg show.