US Treasurys are proving far more resilient than many investors expected earlier this year, as fresh government data show global buyers still flocking to US assets despite tariff shocks and talk of de-dollarization.
Key Points
Foreign investors poured more than $300 billion into US securities in August and September, easing fears that President Donald Trump’s aggressive tariff announcements in April would trigger a lasting “Sell America” wave and a damaging exodus from US Treasurys.
Instead, the latest figures from the Treasury Department suggest the opposite: overseas appetite for US debt remains strong, and the feared global dumping of US Treasurys has not materialized.
Benjamin Schroeder, senior rates strategist at ING, summed up the shift in a note to clients.
“That ‘Sell America’ thing was a one-week trade back in April. Since then, it’s absolutely been ‘Buy America Back,’” he wrote.
Foreign Demand for US Treasurys Stays Strong
The new Treasury Department data, released this week after a delay tied to the now-resolved government shutdown, show robust net capital inflows into US assets over the late summer.
In August and September alone, more than $300 billion in net foreign capital flowed into US securities, including US Treasurys issued to finance the government’s deficits.
For analysts who had warned that Trump’s tariff moves could trigger a sustained selloff in US Treasurys, the numbers offer a clear rebuttal.
John Canavan, lead analyst at Oxford Economics, said there is “no evidence of the sell America fears carrying through to significant selling of U.S. Treasury debt.”
Foreign investor demand for US Treasurys “has shown no signs of declining,” he added.
Japan remains the largest foreign holder of US Treasurys, and its holdings continued to rise through September. Canavan also pointed to a rapid increase in Treasury holdings across Eurozone countries and a stabilization in China’s holdings, following a decade of gradual declines.
Why Strong US Treasurys Demand Matters for Households
The resilience of US Treasurys is not just a market story; it has direct consequences for American households.
Steady foreign demand helps keep interest rates in check for consumers, even at a time of global tensions, trade disputes and political uncertainty.
If global investors were dumping US Treasurys in large volumes, the federal government would need to offer higher yields to attract buyers. That jump in borrowing costs would filter through the financial system, pushing up rates on mortgages, auto loans and other credit products.
It would also leave Congress facing a higher interest bill to service federal debt.
So far, that worst-case scenario has not played out. Instead, continued foreign interest in US Treasurys has helped anchor yields and reduce pressure on household borrowing costs, even as investors explore opportunities outside the United States.
Diversification Without Dumping US Treasurys
The latest figures also show that strong demand for US Treasurys is compatible with broader diversification by global investors.
Capital is flowing not only into America but also into Europe, Asia and other regions. That multi-directional shift has contributed to a more than 7% decline in the US dollar index this year against a basket of major foreign currencies.
Emerging market bonds have benefited in particular, alongside their stock markets. Analysts at Yardeni Research noted that the MSCI Emerging Markets index is up roughly 27% this year, its strongest gain since 2009.
In their view, there is an opportunity to invest “broadly across EMs,” while still being “mindful of the risks and regional disparities” before taking positions. They highlighted Korea, Colombia, Greece, South Africa, and Peru as major beneficiaries of the current environment, even as some Southeast Asian markets have struggled.
That pattern suggests investors are broadening their exposure rather than abandoning US Treasurys altogether.
Central Banks Shift Reserves—But Keep US Treasurys in the Mix
The de-dollarization debate has focused heavily on what global central banks are doing with their reserves, and here too the story is more about gradual adjustment than dramatic change.
The US dollar remains the dominant global reserve currency, but central banks are increasingly diversifying the assets they hold to support trade and stabilize their financial systems.
One clear trend has been a greater allocation to gold. Analysts say that shift has helped support this year’s rally in gold prices, with retail investors also adding to demand.
“Central banks are planning for gradual diversification rather than widespread de-dollarisation,” the Official Monetary and Financial Institutions Forum wrote after surveying central bankers, citing gold as a particularly popular alternative asset.
Crucially, diversifying away from the US dollar does not automatically mean heavy selling of US Treasurys.
Gennadiy Goldberg, head of US rates strategy at TD Securities, stressed that point in a note to clients.
He wrote that while foreign governments and central banks appear to be buying fewer US Treasurys, private-sector investors abroad continue to step in.
According to Goldberg, inflows from bond funds into the United States have recently outpaced those into Canada and Europe, reinforcing the idea that US Treasurys remain attractive relative to other major bond markets.
US Treasurys Still Favored in Global Bond Markets
Looking ahead, Goldberg sees current trends in US Treasurys extending into next year.
He argued that the coming year is “shaping up as a continuation of 2025,” with US Treasurys likely to outperform bonds in other large economies. If that view proves accurate, it would help push down borrowing costs for US households even further.
At the same time, he noted that the de-dollarization narrative “continues to hum along under the hood” and could resurface when Trump announces a replacement for Federal Reserve Chair Jerome Powell next year.
That appointment could become a fresh catalyst for debate over the long-term status of the dollar and the role of US Treasurys in global portfolios.
But for now, the data show that concerns about a broad, coordinated withdrawal from US Treasurys are not being borne out.
A Nuanced Picture: De-Dollarization Talk vs. US Treasurys Reality
The latest figures from the Treasury Department and analysis from market strategists paint a more nuanced picture than the headlines about “Sell America” or sudden de-dollarization.
On one level, investors and central banks are clearly diversifying. Emerging markets are drawing more capital, the dollar has weakened this year, and official reserves are tilting slightly more toward gold and other assets.
On another level, US Treasurys remain central to how global savings are deployed. Private foreign investors continue to buy, Japan and Eurozone holdings are climbing, and even China’s retreat from US Treasurys over the past decade appears to have stabilized in recent months.
“The important point to keep in mind is that as long as diversification occurs amid a rising global savings pool, investors will be able to diversify their holdings without dumping Treasuries,” Goldberg wrote.
For American borrowers, that ongoing demand for US Treasurys is critical. It allows global investors to spread their risk and seek returns across regions while still providing a deep, liquid market that keeps US funding costs from spiking.
For policymakers and markets, the message is similarly clear: despite periodic bouts of anxiety, the era of wholesale abandonment of US Treasurys has yet to arrive.
FAQ’s
Are foreign investors still buying US Treasurys?
Yes. Recent Treasury data show more than $300 billion in net foreign inflows over August and September, with no evidence of large-scale selling. Demand from private foreign investors remains solid.
How do US Treasurys affect interest rates for households?
US Treasurys help set the benchmark for borrowing costs across the economy. When global demand for Treasurys is strong, yields stay lower, which helps keep mortgage, auto loan and other consumer rates in check.
What does de-dollarization mean for US Treasurys?
De-dollarization refers to countries slowly diversifying away from the U.S. dollar in reserves and trade. So far, this has meant more gold and other assets—not a broad dumping of US Treasurys, which remain a core safe-haven holding.
Who holds the most US Treasurys among foreign investors?
Japan is currently the largest foreign holder of US Treasurys, with its holdings still rising. Eurozone investors have been increasing their positions as well, while China’s holdings have recently stabilized after years of gradual decline.
