Data Disprove Treasury Demand Doubts

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Are US government bonds losing their shine? Pundits seem to think so, suggesting things like tariffs, the One Big Beautiful Bill Act (OBBBA) and President Donald Trump’s alleged impairment of Fed independence are spooking international investors out of America’s bond markets. Yet the data—both short- and long-term—suggest Treasury demand is alive and well, so these fears seem off base to us. Rather, we see them as bullish bricks in stocks’ wall of worry.

Pundits explain this supposed risk in several ways. Some claim, citing Congressional Budget Office (CBO) projections, that the OBBBA will add trillions to US debt over the next decade—risking America’s debt serviceability.^[i] Others say Trump’s constant criticism of Fed Chair Jerome Powell threatens the Fed’s independence, potentially leading to policy errors and higher inflation—reducing Treasurys’ value.^[ii] Or, more broadly, they argue Trump’s tariffs could weaken America’s global economic leadership, making Treasurys less attractive. Many cite long-term Treasury yields’ occasional upticks this year as evidence, since rising yields are often seen as a sign of growing risk.

Mind you, international investors’ broadly moving away from US assets would mark a significant shift. America’s bond markets have long been the world’s deepest and most liquid, making them a popular destination for nervy investors seeking a port in a storm.

But here is the thing about narratives: Without supporting data, they are equivalent to tall tales. And in this case, recent releases suggest this tale of international investors fearfully fleeing US bonds is pretty … ummm … tall. The US Treasury’s latest Treasury International Capital report—released last Thursday—shows overseas investors’ holdings of US Treasurys rose to a record $9.16 trillion in July, up from $8.43 trillion a year earlier.^[iii] Importantly, the data show this wasn’t about market movement—foreign investors bought more US assets than they sold. This … isn’t the rest of the world fleeing US assets.

July isn’t an outlier. Non-US investors have been net Treasury buyers for a while now—despite the aforementioned worries. Exhibit 1 shows this, charting foreign investors’ total ownership of US government debt since 2024.

Exhibit 1: Foreign Ownership Is Rising—Not Falling

Source: US Treasury, as of 9/24/2025. Total foreign ownership of US Treasury securities, December 2023 – July 2025.

Yes, overseas ownership is up since Trump’s second election and his sweeping tariff announcement on April 2. Now, the OBBBA became law in July, so we will have to wait and see where ownership levels go from here. But for all the talk of rate volatility, 10-year yields stand at 4.18% presently, down from July 31’s 4.37%.^[iv] This, too, isn’t what you would expect if investors abroad are fleeing US assets.

Actually, international investors’ share of US Treasurys looks fairly stable over the longer term. Exhibit 2 shows this, charting the breakdown US debt ownership since 2015. Now, 2020’s downward shift in foreign ownership might raise eyebrows, but that is more about the government’s rapid debt issuance to finance COVID assistance, married with a new, massive Fed quantitative easing (QE) program. “Domestic investors” includes the Federal Reserve, and QE entails the Fed buying US Treasurys, so that is more about US fiscal and monetary policy changes, not an overseas debt dump. Total foreign ownership did fall in the wake of COVID lockdowns, falling from February’s $7.2 trillion to $6.9 trillion in April, likely as international central banks and governments deployed their own COVID assistance plans. But it recovered nicely from there, finishing 2020 up 3.3%.^[v]

Exhibit 2: No Exodus or Huge Inflow

Source: FactSet, as of 9/25/2025. Outstanding debt as of July 2025.

Mind you, July’s data don’t signal a universal buying spree. China and Canada were net sellers in July, offloading around $25.7 and $57.1 billion in US government debt, respectively. Big net purchases from Japan, France and the UK more than offset these sales—hence the overall increase in foreign holdings.

This hints at shifts under the hood before July, too. Exhibit 3 breaks down foreign holdings by country—last July versus July 2015. Way back then, many people feared China could dump our debt and send rates skyward. This was always a false fear, but now look. You arguably need to add Belgium to China, as it custodies many bond holdings there. This brings its total to 12.7% now versus 22.6% in 2015, marking a big reduction in its share of US debt. Despite the smaller share, no calamity has ensued.

Exhibit 3: Top 10 Foreign US Treasury Holders: 2025 vs 2015

Source: US Treasury, as of 9/24/2025. Major foreign holders of US Treasury securities, July 2025 and July 2015.

Regardless, as Exhibit 1 hinted at, Treasury markets don’t depend on international buyers. Most US government debt belongs to … well, the US. Demand is largely homegrown, as Exhibit 4 shows.

Exhibit 4: Most US Debt Is in American Hands

Source: FactSet, as of 9/24/2025. Outstanding debt as of July 2025.

When weighing this issue, we think many overlook the millions of US investors that seek out Treasurys and other government securities. Whether it be in pension plans, an individual retirement plan, insurance company, bank or what have you, Americans often seek US debt for stable, yield-generating assets that can reduce expected portfolio volatility. And where better to shop than at home, where bond markets lead the world in breadth, depth, liquidity and historical stability.

Others forget the Federal Reserve’s massive balance sheet, which holds around $4.1 trillion in Treasury securities.^[vi] Or the Social Security trust funds’ approximately $2.7 trillion.^[vii] So even though foreign demand is up lately, domestic demand has outpaced it in recent years even as the Fed has been shrinking its balance sheet.

Overall, we just don’t see much evidence that US assets have suddenly become a global pariah—it looks more like the other way around. Thus, we think this is a false fear—and those are always bullish.