China slashed holdings of U.S. Treasuries for a seventh consecutive month in June, Treasury department data released on Monday showed, with investors closely tracking this measure in the wake of tensions between the world's two largest economies involving Taiwan.

China's stash of U.S. government debt dropped to $967.8 billion in June, the lowest since May 2010 when it held $843.7 billion. In May, the world's second biggest economy had $980.8 billion in Treasuries, data showed. China's hoard of U.S. debt has seen multiple 12-year lows the last few months.

"This looks more likely a function of Chinese FX intervention to keep USD/CNY stable in a strong dollar environment," said Chris Turner, global head of markets at ING.

"A further decline in China's U.S. Treasury holdings looks likely as geopolitical spheres of influence sharpen after Russia's invasion of Ukraine and the seizure of Russian FX reserves.

Since hitting a roughly 20-month high in mid-May, the U.S. dollar has been largely stable against the Chinese yuan, sliding about 1%. The dollar was last up 0.5% at 6.7755 yuan.

There is an added wrinkle between U.S.-China relations involving Taiwan, a self-governed island China claims as its own, but that is not reflected just yet in the data, which covers the June numbers. In early August, U.S. House of Representatives Speaker Nancy visited Taiwan, the highest level U.S. official to visit the territory in 25 years, prompting China's outrage.

China later announced it was halting dialogue with the United States in a number of areas, including between theater-level military commanders and on climate change, in a furor over Pelosi's visit.

Data also showed Japan increased its holdings of Treasuries to $1.236 trillion in June, from a revised $1.224 trillion in May. The Treasury report released in July showed Japan had $1.213 trillion in Treasuries for the month of May.

Overall, foreign holdings of Treasuries rose to $7.430 trillion in June from a revised $7.426 trillion in May.

On a transaction basis, U.S. Treasuries saw net foreign inflows of $58.9 billion in June, compared with inflows of $99.84 billion the previous month. U.S. Treasuries have posted foreign inflows for a second straight month.

The inflows were generally in line with price action in the Treasuries market. The benchmark 10-year Treasury yield started June at 2.9310%, and ended the month at 2.974%.

The Federal Reserve raised benchmark rates by 75 bps in June and July and is on track to hike rates again in September to tame inflation.

In other asset classes, foreigners sold U.S. equities in May for a sixth straight month amounting to $25.36 billion, from outflows of $9.15 billion in May.

U.S. corporate bonds posted inflows in June of $13.99 billion in June, compared with $4.46 billion the previous month. Foreigners were net buyers of U.S. corporate bonds for six straight months.

The data also showed U.S. residents once again sold their holdings of long-term foreign securities, with net sales of $50.5 billion in June, from sales of $22.8 billion in May.