Holdings of Chinese government bonds by offshore investors rose in January despite a steep drop in yield premiums over U.S. government debt, as investors continued to seek safe havens from inflation and rising rates afflicting other markets. Offshore investors held Chinese government bonds worth a record 2.52 trillion yuan ($397 billion) at the end of January, according to data released on Friday evening by China Central Depository and Clearing Co (CCDC), the main depository institution for China’s interbank bond market. That was up about 2.7% from a month earlier. Holdings of quasi-sovereign bonds issued by China’s policy banks, typically the most liquid instruments traded on China’s interbank bond market, slipped by 1% from the previous month to a 1.07 trillion yuan. Total foreign holdings of yuan-denominated bonds cleared through CCDC stood at a record 3.73 trillion yuan, up 1.4% from December. Additional interbank market holdings data from Shanghai Clearing House was not yet available on Saturday. Diverging monetary policies between China and the United States has led to a sharp squeeze on Chinese bonds’ yield premiums. The spread between the Chinese and U.S. 10-year yield has narrowed by more than half since early December, from more than 155 basis points to around 75. But even as returns on Chinese assets have eroded, global fund managers have continued to pump money into mainland bonds and equities, betting China’s stability pledges, monetary and fiscal easing and subdued inflation could shield them against volatility in other markets.