Analysis of US Treasury and State Department data shows countries and
territories close to the United States net purchased $174.3bn of US Treasures
(excluding short-term Treasury bills) in the first eight months of 2026, the
weakest same-period reading since 2021 and down more than 60% YoY. The decline
is concentrated in Asia: Japan, the largest overseas holder, net bought just
$389m through August, a 99% YoY drop; South Korea was a net seller of $23.8bn,
the largest reduction for the period since records began in 1977. The statistics
do not separate official from private flows, and governments have not signaled
coordinated divestment. Factors cited include local currency weakness, rising
domestic yields, stronger equity appeal and concerns about US policy
uncertainty. State Street senior fixed-income strategist Masahiko Loo said: “The
Treasury market hasn’t lost overseas buyers, it has lost passive, automatic
allocators. Increasing US policy unpredictability undermines the logic of
structurally overweighting Treasuries and habitually recycling surplus funds
into them."
