Markets are carefully observe Foreign investors are for all signs Acidification on US debt. A retreat when buying bonds Central banks Could send the loan costs higher if other investors do not fill the gap, which may put the US government into a narrow position.
President Donald Trump’s chaotic tariff in April marked the highlight of the “Sell America“Trade as stocks, bonds and the dollar. Since then, the shares have dramatically gathered on the” Liberation Day “level, and the yields of the Ministry of Finance, which fall with increasing bond prices, have committed themselves.
A falling dollar Still one of the greatest stories on Wall Street in 2025, and the monetary authorities seem to reduce their exposure to American bonds. Since large and stable buyers of the central bank take a step back, it is concern that more turbulence could enter into the market for fixed income.
“The other big deal that we are concerned about is the fact that foreign private investors may not contribute to financial papers (and) probably also withdraw from the market” Bank of Americatold Assets. “Therefore, it creates a great concern about foreign investors who continue to support the image of the financial requirements.”
Foreign buyers account for around 30% of the US financial market. after Two Apollo Chief Economist Torsten Sløk. A note By Swiber and colleague Bofa -credit strategist Katie Craig proposed on Monday that the demand for these investors shows “cracks”.
Due to the status of the dollar as the global reserve currency and the confidence of investors that the American government will always pay for its bills, the US US finances are normally allowed.
However, if foreign investors no longer consider us a safe port, the Ministry of Finance could force this to pay higher yields to bring buyers back. Such a step would express Upward pressure On the interest rates for mortgages, small business loans and other common loans in the entire economy.
“The overall picture here is that (the) Ministry of Finance has more debt Financing finances, “said Swiber.
The paradox of a weaker dollar
Foreign stocks of the US state bonds reached an all-time high of $ 9.05 trillion in March. after On the latest data from the Ministry of Finance, compared to the previous year by almost 12%. The Ministry of Finance will publish data from April on Thursday that marks the amount of the volatility of the bond market.
However, further current data may already be a warning sign.
More than 200 central banks and other foreign official companies such as SOE -GEARTH WEATTH Finds keep government bonds and other assets in the care of the New York Federal Reserve. These stocks Last week by $ 17 billion and has fallen by $ 48 billion since the end of March, shortly before Trump’s tariffs triggered a disturbing bond sale.
Usually the monetary authorities park the cash that they generate from the sale of US debts in the reverse repurchase facility of the New York Fed, in which they receive government bonds as security.
This was not the case this time. The foreign participation at the facility has dropped by $ 15 billion since the end of March. Overall, this is that US assets from foreigners in the Fed have dropped by around 63 billion US dollars in just over two months.
“It looks like a net outflow of these assets from the Fed balance,” said Swibber.
This decline is unusual that Swiber and Craig found in the face of the great decline in the dollar in 2025. As a rule, these types of sales occur when the dollar is strong.
The monetary authorities, said Swibber, could sell their dollar participations and invest cheaply elsewhere. Or nations such as Japan, India and Turkey can sell the Greenback and buy their own currency back to prevent it from continuing to drop against the dollar.
However, this is not the case at the moment, with the dollar fell by 9% compared to the currency basket in the DXY index.
“That’s why it’s particularly strange, isn’t it?” Said Saber. “The sales do not defend currencies or rejection.”
Instead, Swiber and Craig wrote, it looks as if central banks and other official companies stand out from the US assets. Increasing trade voltages naturally give nations more reason to lower their dependence on the world’s largest economy.
“The official sector has really not been buying Treasury Securities for several years,” said Swibber. “Your stocks have been pretty relatively flat since Covid.”
Now the sector is also selling.
When foreign private owners such as banks and institutional investors meet, Swiber takes care of who will pick up the gap.
Consider the “Fund flow of the Fed” by the Fed Data From the first quarter of 2025, demand was essentially exclusively from foreign investors and broker dealers, according to her and Craig. Rear fund Do not show.
“Foreign investors were some of the largest buyers we saw in the first quarter,” said Swibber.
If you are worried in the future, she added, that is not good for the bond market.
